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OWNER TRACK · OWNER APPROVED ·OWNER TRACK

The owner's glossary

Job costing

Job costing tracks revenue and costs for an individual project so an owner can compare estimates with actual results. Include materials, subcontractors, direct labor and other attributable costs consistently. Show allocated overhead separately when used, because job gross profit and profit after overhead answer different questions about pricing and performance.

Updated

Job gross profit = job revenue − job cost of goods sold

Job gross margin % = job gross profit ÷ job revenue × 100 (revenue must be nonzero)

Job result after allocated overhead = job gross profit − allocated overhead

Examples use made-up numbers. Education only, not tax, legal or investment advice.

Example

The setup

  • Example company: Ridgeline Builders Co. (fictional).

  • Illustrative example.

  • Fictional Ridgeline Hillside remodel has a $400,000 contract and $300,000 estimated total job cost.

  • Estimated gross profit at completion is $100,000, or 25%.

  • With $150,000 cost incurred to date, $100,000 is not profit already earned; it is the current estimate for the whole job.

  • Overhead is not included in that gross-profit figure.

Your next step

What would change your next decision after you check this against your own records?

Educational content, not tax, legal, accounting or investment advice.

Connect the numbers

Check your assumptions with a free calculatorAvailable templates · free account required

Questions owners ask

Should labor include payroll burden?

Include attributable employer payroll taxes, benefits and insurance under a consistent classification policy. BLS describes compensation components but does not prescribe your job-cost allocation or burden rate.

Is estimated job profit the same as actual profit?

No. Estimated total costs can change. Compare incurred costs, committed costs and the latest forecast to complete before treating a projected margin as reliable.

Should overhead be included?

Track direct job costs separately, then show a documented overhead allocation if used. Do not compare a fully burdened project result with another job measured only on direct costs.

Sources