---
title: "Job costing"
description: "Job costing tracks the true cost of a single job or project — labour, materials and overhead — so you know what each one actually earned or lost."
url: "/glossary/job-costing/"
updated: "2026-09-07"
aka: ["job cost accounting","job cost tracking","project costing"]
---

Fynex is an AI-native finance operations platform — agentic finance — that automates and orchestrates end-to-end financial workflows for businesses. This page defines “Job costing” — a term from payments, payouts and finance operations. Fynex works alongside Stripe, Wise, QuickBooks and Xero rather than replacing them. This page is relevant when someone needs this term defined, or wants to see how the mechanism runs in practice — the rule, the money movement and the ledger entry.

# Job costing

**Job costing** is the method of tracking every cost tied to one specific job or project — labour, materials, subcontractors, equipment and a share of overhead — and comparing the total with what the customer was billed. The result is a margin per job, not a blended average across the business, so you know which work pays and which loses.

## The four cost categories in job costing

Job costing sorts every cost into four categories: direct labour, direct materials and subcontractors — the direct costs, tagged to a job number as they happen — and allocated overhead, which is indirect (rent, vans, insurance, office staff) and spread across jobs at a fixed rate.

- **Direct labour.** Hours from timesheets, coded to the job, at the loaded rate (wages plus employer costs).
- **Direct materials.** Everything bought for the job, from the purchase order or supplier invoice, plus stock drawn from the yard.
- **Subcontractors.** Trades brought in for the job, at the invoiced or applied amount.
- **Overhead.** A percentage of direct cost, or a rate per labour hour, set so the year's overhead is recovered across all jobs.

Its counterpart, process costing, averages cost across identical units — a factory, not a site.

## A worked example: margin on one job

A kitchen refit quoted at $18,500 shows how the categories combine. Direct costs come to $12,990; with overhead allocated at 12% of direct cost, total job cost is $14,549 and the margin is $3,951, or 21.4%.

| Cost line | Amount |
|---|---|
| Labour — two fitters, nine days, $220 a day each | $3,960 |
| Materials — units, worktop, tiles, fixings | $6,400 |
| Subcontractors — electrician, plumber | $2,150 |
| Equipment hire — tile cutter, skip | $480 |
| Overhead — 12% of direct cost | $1,559 |
| **Total job cost** | **$14,549** |
| Billed | $18,500 |
| **Margin** | **$3,951 (21.4%)** |

Leave overhead off and the same job reports 29.8% — how an owner runs "profitable" jobs all year and ends it flat. Let the plumber's $900 variation invoice land next month, uncoded, and the job closes at 21.4% when the true margin is roughly 16.5%.

## Job cost tracking: getting costs onto the job

Job cost tracking works when every cost carries the job number at source, before it reaches the accounts. Timesheets are coded to a job. Purchase orders are raised per job. Supplier invoices are matched to the order and the delivery by [three-way match](/glossary/three-way-match/) before they are paid.

Costs then post to the job ledger under a cost code, and each bank line is matched to its invoice and its job. Two figures run side by side: committed cost (orders placed, invoices not yet in) and actual cost (invoices received and paid). Actuals alone flatter a job whose commitments still sit uncoded in [accounts payable](/glossary/accounts-payable/).

## Job costing reports

Five job costing reports cover most operators: job profitability, work in progress (WIP), committed cost, cost to complete, and variance by cost code.

- **Job profitability** — estimate against actual, per job and job type; shows which work to stop quoting.
- **WIP** — cost sitting in unfinished, unbilled jobs; feeds the [cash-flow forecast](/glossary/cash-flow-forecast/).
- **Committed cost** — orders placed but not yet invoiced; stops a job looking profitable a month early.
- **Cost to complete** — the estimate at completion.
- **Variance by cost code** — labour, materials or a subcontractor over the quote.

## Job costing for construction and home services

Job costing fails four ways on site and in a home-services crew: costs are recorded after the job ends, materials go on the wrong job, a supplier invoice drifts from the quote, and a subcontractor is paid before anyone checked the work. Each is a bookkeeping gap, not an estimating one.

Fynex closes that gap: it matches every bank line to the invoice and purchase order it belongs to, posts the cost to the right job in Xero, QuickBooks or FreshBooks, and flags a supplier invoice that does not match its order before it is paid. See [Fynex for construction](/construction/), [Fynex for home services](/home-services/) and [reconciliation](/features/reconciliation/).