All costs of direct materials, direct labor, and overhead for a particular job are accumulated on a job order cost card. When the job has been completed, those costs are totaled. The total is then divided by the number of good units produced to find the product unit cost for that order. The product unit cost is entered on the job order cost card and will be used to value items in inventory. Many service organizations use a job order costing system to track the costs of labor, materials and supplies, and service overhead to specific customer jobs. Labor is an important cost for service organizations, but their materials costs are usually negligible. To cover their costs and earn a profit, service organizations often base jobs on cost-plus contracts, which require the customer to pay all costs incurred plus a predetermined amount of profit.
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