When starting the Job Costing System for a company, you must enter the existing data from the previous accounting system. For the Job Costing System, you must have set up procedures completed for the Accounts Payable System, the Payroll System, the Inventory Control System, the Accounts Receivable System and the General Ledger System.
It is important to know what each of these other systems has to offer to the Job Costing System and why these set up procedures need to be prerequisite to the job costing setup.
The accounts payable set up includes the set up of vendors which are needed prior to entering purchases to a Job Id.
The payroll set up includes the set up of the employees and the standard labor charge rate. Labor is charged to a Job Id with the use of the Payroll System.
The inventory set up includes the set up of inventory product codes and their beginning balances. Inventory items can be charged to a job, but only with the use of an inventory product code.
The accounts receivable setup includes the set up of the customers which allows invoicing of a job and the posting of the sale. The customer is also entered on a job record.
The general ledger set up includes the set up of the chart of accounts. A general ledger work in process account must be entered for each job, and a general ledger expense account must be entered for each job activity.