Implementation of job order costing method in manufacturing enterprises

In the contemporary business management, it has become imperative to calculate the costs as realistically as possible so that enterprises can determine appropriate sales and management policies in line with today's highly competitive environment. Cost accounting is a method that provides all kinds of cost information that the management of an enterprise needs. In manufacturing enterprises, factors like product type, production technique, size of the enterprise and its organizational structure should be taken into account when determining what costing method should be employed to calculate the costs of manufactured goods. There is not a single formula that can be universally used by every business. Therefore, each business has to build a costing system that best suits its structural characteristics and needs, constantly improving and optimizing it in keeping with changing conditions. A manufacturing enterprise might employ the make to order approach or mass production approach. Since the products are manufactured at different grades and as different business projects in such an enterprise, the production structure requires the application of job order costing method. In this study, all the cost data for the project called Stadium Led-line Lighting, completed by the enterprise using the make to order approach, were examined and relevant calculations were made by using the job order costing method. While the costing method currently used by the enterprise reports profit for the Stadium Project, the application of job order costing method to the same project reveals that the company has actually lost money. The job order costing method effectively presents the relevant cost data to the management, correctly identifying whether an operation is profitable or not. The detailed breakdown of the job orders and cost centers makes it easier to control the expenditures.