Job costing and management accounting work hand in hand when it comes to making important financial decisions for a business. In order to accurately predict the success of major business decisions, owners and CEOs rely on data-driven reports from job costing and management accounting.
What is Management Accounting?
Management accounting is the process of creating analytical financial reports to aid in the decision making process of short and long-term business goals. It uses unit economics to organize a business into its most basic parts to understand where profitability is coming from to measure success.
These units differ depending on your business and industry. If you sell t-shirts, your management accounting will look at the success of t-shirt “units.” If you’re in a business where people are the product, the unit to measure is your employees. When employees are the unit, management accounting is analyzing the cost of your employees. This is the ability to run accurate reports into the cost of your employee’s work so that when you put a price on their service or function, you can predict how much money you’ll earn for that job function.
What is Job Costing?
Job costing is the process of accurately tracking the cost to deliver a product or a particular function. Accurately tracking this process allows a business to achieve its gross profit margin by charging the right price.
The ability to accurately estimate job costing effects not just your gross profit margin but also the decision to hire new employees, how much to charge for products and services, and more. And one of the best tools to estimate job costing is a thorough time and attendance software.
Dominion’s time and attendance software provides you with the data you need to accurately estimate the cost of future projects. Our software tracks employees who work different schedules, at different locations, and much more. For example, our system helps with the following pain points:
Ability to identify revenue leaks in project budgets
Accounts for all billable hours
Syncs time cards with payroll
Decreases the difficulty of identifying high revenue projects
Learn more about how our time and attendance software is suited for job costing here.
How does management accounting and job costing work together?
Management accounting and job costing work together to identify profitable sections of your business. You can think of it as management accounting identifying the larger areas of loss and revenue, while job costing tracks the smaller components responsible for revenue loss and increased profit margins.
If you’re still on the fence about the importance of management accounting and job costing, consider that they especially matter for service businesses due to the pressures of:
Limited skilled applicant pool
High competition for customers
By combining the insights of management accounting and job costing, a business can accurately identify trends and opportunities with the highest profit potential. Once key opportunities are identified, business owners can set company-wide goals and help employees contribute to them. If you’re ready to make data-driven decisions about your business, Dominion’s Time & Attendance software is your single-source platform to maximize your organization’s resources. Request a demo below to learn more!