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A job order costing system is practiced by companies that make (perform) relatively small quantities or distinct batches of identifiable, unique products or services.
For example, job order costing is appropriate for a publishing company that produces educational text books, an accountant who prepares tax returns, an architectural firm that designs commercial buildings, and a research firm that performs product development studies. In each instance, the organization produces tailor-made goods or services that conform to specifications designated by the purchaser of those goods or services.
Services in general are typically user specific, so job order costing systems are commonly used in such businesses. In these various settings, the word “job” is synonymous with engagement, project, and contract.
