A job order costing system is used when a company produces a product or provides a service that is unique-that is, the cost of one product or service is different than that of another A Job order costing must be able to identify each individual job and accumulate its costs separately from the costs of other jobs. In manufacturing, the jobs may be for a single item or a batch of similar items. The flowchart illustrates the flow of costs into Work in Process and Finished Goods in a job order costing system Cost Flows in a Job Cost System Work in Process- Test & Packaging Dept Materials Work in Process-Assembly Dept Finished Goods Beg Inventory Cost of Units + Direct Materials transferred Beg Inventory + Cost of units transferred in + Direct Labor Job# 1,#2, #3 + Factory Overhead applied Job# 1,#2,#3 End Inventory Job#2,#3 Cost of Units Beg Inventory + Cost of units Cost of Goods transferred in Beg Inventory out transferred out + PurchasesDirect Materials + Direct Labor Job# 1,#2, #3,#4 +Factory Overhead applied Job# 1,#2,#3,#4 Sold Job# 1 Job #2 Job#3 Job #4 Job# 1, Job#2 Job#3 Job# 1 End Inventory Job# 1 End Inventory End Inventory Job #4 Factory Overhead Actual Factory Overhead: + utilities expense Factory overhead + depreciation of applied machinery + supplies Costs to date by job are shown