CPIM Practice Exam

In job costing, costs are assigned to what?

1. Specific cost categories

2. Specific jobs

3. Overall operations

4. General accounting procedures

The correct answer is: Specific jobs

In job costing, costs are assigned to specific jobs because this method is designed to track and accumulate costs for individual projects or orders. This approach is crucial in industries where products are customized or produced in small batches—such as construction, manufacturing, and service sectors. By assigning costs directly to each job, managers can determine the total cost incurred for that specific job, including direct materials, direct labor, and allocated overhead. This assignment allows for a detailed analysis of profitability for each job and facilitates accurate pricing, budgeting, and financial reporting. Tracking costs at the job level also helps in assessing efficiency and effectiveness in completing specific projects, leading to better decision-making and management of resources. In contrast, options such as specific cost categories, overall operations, or general accounting procedures do not capture the detailed nature of expense allocation that job costing entails. These alternatives focus on broader financial categorizations or organizational operations and would not enable the precise tracking needed for individual job performance analysis.