Job costing template

What is job costing?

Job costing is working out what one job costs you: the material, the labour and machine hours, any outside processes, and a share of the overheads that keep the works running. You do it twice. Before the job, the estimate sets your price. After it, the actuals show whether the job made the margin you quoted.

What goes on a job cost sheet?

One line for each cost on the job, grouped as materials, labour, machine time, outside processes and overheads. Each line has a quantity, a rate and a cost, once for the estimate and again for the actual. At the bottom sit the total cost, your margin, the price and the price each.

1. 01Materials are raw material and bought-in parts from the bill of materials, at today's prices, with an allowance for offcuts and setting-up scrap.
2. 02Labour is the hours people spend on the job, at what an hour of that person costs you. That's their pay plus employer's National Insurance, pension and holiday, spread over the hours they book to jobs.
3. 03Machine time is setup and run hours on each machine, at your machine rate. If one person minds a machine for the whole cycle, count those hours once, as labour or in the machine rate.
4. 04Outside processes are work sent out, such as anodising, plating, heat treatment or laser cutting, at the supplier's price plus any carriage.
5. 05Overheads are rent, power, supervision, the office and everything else that isn't on a job, charged to each job through your overhead rate.
6. 06Margin is what you add on top of cost. The sheet adds it as a mark-up on cost, so 20% on £1,750 is £350. If you think in margin on the price, a 20% margin needs a 25% mark-up.

The job costing template

One sheet per job. Put the batch quantity at the top, then a line for each cost.

How do you fill in a job cost sheet?

Fill in the estimate columns when you quote, from the drawing, the bill of materials and your routing. Fill in the actual columns when the job is done, from job cards, timesheets and supplier invoices. The Excel version works out each cost, the variance and the price.

1. 01Cost type and What hold the cost group, and enough words to know the line again, such as "machining centre, two operations".
2. 02Est. qty is the hours, parts or kilos you expect the whole batch to use.
3. 03Rate is the cost of one hour, part or kilo: your labour or machine rate, the material price or your overhead rate.
4. 04Estimate is quantity times rate.
5. 05Actual qty and Actual are what the job used, from job cards and invoices, at the same rate unless a price changed.
6. 06Variance is actual minus estimate. A plus figure means the line cost more than you allowed.

Job costing example

This is the job behind the quotation example: 250 machined aluminium brackets, costed at £1,750 and quoted at £8.40 each with a 20% mark-up. Machining ran 1.5 hours over and five blanks were scrapped at first-off, so the job made £231.25 instead of £350.

How do you set an overhead rate?

Add up a year's overheads, then divide them by the hours you expect to book to jobs in that year. £180,000 of overheads over 10,000 booked hours is £18.00 an hour. Every hour on a job then carries £18.00 of overhead, so a job with 15 machine hours carries £270.

1. 01List a year's overheads: rent and rates, power, staff who don't book to jobs, insurance, maintenance, machine finance and the rest. Last year's accounts are a good start.
2. 02Count the hours you'll book to jobs: machines or people, times hours a week, times working weeks, times the share of that time that goes on jobs.
3. 03Divide the overheads by the hours. That's your overhead rate.
4. 04Choose machine hours or labour hours, and keep to it. Machine hours suit a machine shop; labour hours suit fabrication and assembly.
5. 05Work it out again when overheads or workload change. A rate set in a busy year undercosts every job in a quiet one.

Count the hours you book to jobs, not the hours the machines are switched on. If your machine rate already includes overheads, leave the overhead line empty, or you'll charge them twice.

What do you do with the variance?

Read it line by line, because a total that looks fine can hide a line that ran over. A line over on one job can be bad luck. The same line over on three jobs means the time or the rate you estimate with is wrong. Correct it for next time, and price repeat orders from the actuals rather than the old estimate.

How does job costing feed a quotation?

The price on the job cost sheet, divided by the quantity, is the unit price on your quote: £2,100 for 250 brackets is £8.40 each. Cost fixtures, programming and inspection reports separately, because they go on the quote as one-off charges. For price breaks, cost the job again at each quantity.

Setup hours stay much the same however many you make, so the price each falls as the batch grows. The quotation template has lines for the unit price, price breaks and one-off charges, and the bill of materials template gives you the material lines.

Can AI help with job costing?

AI can do the gathering: pulling booked hours from job cards, matching supplier invoices to the job, filling in the actual columns and flagging the lines that ran over. It can also find past jobs for the same part. Your estimator sets the times, the rates and the price.

The free check shows which quoting or order job is worth handing to AI first. It never puts estimating first.