Direct Costs in Job Costing Systems

Steps:

• Identify the purpose of job costing: to assign costs to specific jobs or orders for accurate pricing and profitability.
• Distinguish direct costs (traceable to individual jobs) from indirect costs (not traceable, like overhead).
• Recognize direct materials and direct labor as traceable to specific jobs.
• Exclude production overhead, which is allocated across all jobs, not charged directly.

Why B is correct:

• In job costing, only direct costs—direct labor and direct materials—are charged to individual jobs, as per standard cost accounting definitions, allowing precise tracking.

Why the others are wrong:

• A includes production overhead, which is indirect and allocated, not directly charged.
• C omits direct materials, a key traceable cost essential for job-specific tracking.
• D excludes direct labor, another directly traceable cost required for complete job costing.

Final answer: B