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Definition: Job Order Costing is a method for assigning manufacturing costs to an individual product or batch of a product. The job order costing system is used typically when the products being manufactured are significantly different from each other.
The job order costing system creates a job cost record for each item, job or special order. The job cost record will report the direct materials and direct labor that have been used plus the manufacturing overhead assigned to that particular job.
See also Activity Based Costing, Process Costing.