Job Costing - How Much Profit Do You Make?

Having profit from your activity is not equal with having money in your checking account. If you want to really know how much money you make that represent your profit after paying all your bills, you may need to make some calculations.


These calculations enter in what is called job costing. It is important to know exactly how much your profit is, no matter how large or small your business is, because you will need money for your future actions and you need to know where you stand, financially speaking.


Job costing means to calculate how much money you make and how much money you invest in each job. Some projects needs labor and materials, while others do not. For each project, certain calculations must be made in order to establish your profit per job. Make a difference between what counts as general overheads and what should be tracked as specific overheads.


Instead of trying to make calculations on your own, use the tools the market provides you with. Job costing measurements are based on certain features of your business, like revenue per client, evaluation of the materials used on each project, evaluation of time spent on each project, profitability on each job and how much this profitability fluctuates from month to month.


Every project needs to be detailed on these terms, so if you have not done it so far, it is time to evaluate the job costing for your business. As said before, you do not have to get a headache trying to make all these calculations by yourself, but you need the best tools to make them for you. Such a tool is QuickBooks. When you use this tool, you need first to have in mind two aspects of each project you complete, meaning expenses and income. All you provide for customers has a price, so keep your invoices and sales receipts in order. These goes to income. Any material you buy, any cost you pay must be registered as expenses. QuickBooks has a time tracking feature that offers you an image on the time consumed for each project. When you want to see a report, choose one of the preformatted reports and then choose for what period of time you want the report to be made. According to your needs, choose to see the report you want.


A good accountant can always help you evaluate job costing. If you do not understand something from your reports, ask him or her to clarify a few things. After you understand what the report tells you, it is time to apply what you know so you can make use of the report in question. All this information must be used to make your business more profitable.

About The Author:
Giovanna is a writer and publisher of Article Click. For more FREE articles for your ezine and websites visit - www.articleclick.com