Alternatives to Traditional Job Costing - dummies

Alternatives to Traditional Job Costing

By Stephen L. Nelson

Because QuickBooks’s job costing approach may not work for everybody — and may even be more than some users need — you can do some simple job costing or project costing without using the Customer:Job drop-down list. Here are two options:

  • You can use classes to segregate costs. Classes work as a very reasonable way to track income and expense transactions for particular jobs if they’re associated. The traditional Customer:Job drop-down list provides a more convenient way to do this. But if you have your heart set on it, you can also use the Class drop-down list.

    The Class drop-down list or Class column typically appears next to the Customer:Job drop-down list or the Customer:Job column. You work with the Class drop-down list the same way that you work with the Customer:Job drop-down list. Note that the Class drop-down list or column appears only if you enable class tracking by using the Preferences dialog box.

  • You can also construct a very detailed chart of accounts, including accounts, subaccounts, and sub-subaccounts. With a very detailed chart of accounts, you can use collections of accounts to track expenses that are associated with particular projects or jobs. If jobs take a very long time to complete, and you’re working on only a few jobs, for example, the chart of accounts approach works just fine.

If you use an alternative job costing approach with QuickBooks, unfortunately, you won’t be able to rely on QuickBooks’s job costing reports. QuickBooks provides a bunch of handy job costing reports. QuickBooks expects that you’ll use the Customer:Job drop-down list to collect job cost information. If you don’t use the Customer:Job drop-down list, make sure that you have a good way to track the costs associated with a particular job or customer.

Another problem with both alternative approaches to job costing — classes or lots of subaccounts — is that you may later want to use classes and subaccounts in some way that’s incompatible with using them for job costing. Jobs are, very frankly, best accounted for by using the QuickBooks job feature.