Following are the main disadvantages of job costing.
1. For calculating the cost of each job or specific order, we need to record all transactions relating to that job, so, if we compare the benefits of job costing with its cost, then sometime cost will increase than its benefits.
2. There is also chance of errors in this method.
3. If the employees of departments are inefficient, there will no benefit of job costing because overhead cost will increase.
4. In this method, we estimate the overhead on the basis of rates and there is no option of updating the rate. So, there is the chance of over or less calculating of overhead.
5. There is no use of job order costing in service industry.
Related : Advantages of Job Costing
1. For calculating the cost of each job or specific order, we need to record all transactions relating to that job, so, if we compare the benefits of job costing with its cost, then sometime cost will increase than its benefits.
2. There is also chance of errors in this method.
3. If the employees of departments are inefficient, there will no benefit of job costing because overhead cost will increase.
4. In this method, we estimate the overhead on the basis of rates and there is no option of updating the rate. So, there is the chance of over or less calculating of overhead.
5. There is no use of job order costing in service industry.
Related : Advantages of Job Costing
