What is job costing? A job-specific costing technique, used in situations where each job is different and is performed to the customer’s expectations. Helps to determine if your pricing model works effectively. Can be used as a training tool for both sales and operations.
Where to start? Labor – Consider those positions that touch your inventory. Those associates are considered your direct labor which is needed to compute your job profitability. Supplies – Any supply that is used on your inventory as it goes in and out of your building is considered a direct cost. For example, hangers in the laundry, plastic wrap for your tents or chairs and chemicals in your laundry and kitchen. Also consider items needed while on a job site. Everyone of us has guys that are keeping hardware stores in business. These expenses need to be included if they are job related.
Where to start? - Continued Transportation – We consider Maintenance, Repairs and Fuel a direct cost. Some may consider insurance, property tax and registration fee’s also, but we do not. Inventory Wear & Tear – We define a rental life for every piece of inventory. Our rental life is defined by the number of rentals the item will typically get before it’s either broken (not repairable) or not up to quality standards. Travel – Lodging, Meals, Airline, etc.
Labor Warehouse We assign a cost to staging, cleaning, loading and unloading in our POS Formula: Qty Rented X Cost per Activity (Staging, Cleaning, Loading, Unloading) Field Formula: Number of Guys X Number of Hours X Average Fully Loaded Field Rate OR In your payroll system you may be able to assign a job name to each associate and the hours worked on a particular job. Calculating the Numbers
Supplies (Use one of these methods for each department) Two different ways to calculate: First, get two numbers for each of your departments. The gross revenue for 2013 and the amount you spent on supplies for that department. Use the two numbers to get the amount of expense in every $ of revenue. Formula: Cost of Linen Supplies / Linen Revenue For example: $25,000/$250,000 = $0.10 which means for every $1 in revenue the department spends $0.10 in supplies. Second method is specifically finding out what it costs to clean and restock each piece of linen. How much is the hanger, the bag, the tag, the chemicals, the water, etc.
Transportation Add together your maintenance, repairs and fuel costs for 2013 and find out how many miles your trucks hauled during 2013. Formula: Transportation Costs / Truck Miles For example: $150,000/300,000 = $0.50 which means for every mile in truck usage the company spends $0.50 on the truck. Calculating the Numbers
Inventory Wear & Tear Formula: Purchase Price / Rental Life For example: an item has a rental life of 50 rentals and has a purchase price of $100. $100 / 50 = $2 cost per rental Calculating the Numbers
TypeFormulaTotal RevenueSmall table & linen order$700 Labor – WHTask Cost X Qty- $45 Labor – FieldHours X Guys X Ave Wage 4 X 1.5 X 15 - $90 Supplies – LinenSupply Cost per $1 in Revenue X Revenue by Dept on $0.10 X $400 - $40 Supplies - Tables$.05 X $275-$13.75 TransportationTrans. Cost per Mile X Miles 60 X $0.50 - $30 Inventory Wear & TearPurchase Price / Rental Life X Qty Rented $100 / 50 X 20 (Tables) $40 / 10 X 20 -$120 $361.25 Gross Profit
Next Session 6 p.m. – 8 p.m. Café Tu Tu Tango Shuttle service from all Show hotels except those within walking distance. Advance registration and ticket required. Reception Room S320 Keynote AddressSusan Southerland