Advantages of Internal Job Costing

Advantages of Internal Job Costing

In internal job costing the cost of service department charged on the bases of specific job performed by the service department instead of apportionment. This method has several advantages

1.    Logical & Realistic Apportionment

This method of apportionment is more logical and rational than other general apportionment methods. The costs are charged to department, which has actually used the services.

2.    Promote Responsibility Culture

This method promotes culture of responsibility within organization, and service receiving department feel responsibility of cost.

3.    Cost Control

Internal job costing can be helpful for cost saving for the organization. Services will be carefully used by the production /user department, because these services are being directly charged to user department.

4.    Control Action

Internal job costing provides useful information to the management to take appropriate control action to control the costs.