What is primarily tracked in a job order costing system?

In a job order costing system, the primary focus is on the costs associated with individual jobs. This accounting method is specifically designed to measure the costs related to a specific job or order, allowing businesses to assess how much they are spending on each project or product they produce.

Each job is treated as a unique entity, and all costs – including direct materials, direct labor, and overhead – are accumulated for that particular job. This system provides valuable insights into profitability and efficiency on a per-job basis, helping businesses make informed pricing and operational decisions.

While tracking total sales revenue, direct material costs, and direct labor costs are relevant elements of managing costs, the defining characteristic of a job order costing system is its detailed focus on the cost of each individual job, enabling precise tracking of expenditures and better management of resources. This granular approach is crucial for companies that handle distinct projects or customized orders rather than mass production.