Job costing

Job costing is the practice of tracking costs and revenue against individual jobs, projects, or work orders so that profitability can be measured and customers billed accurately. In Business Central's project module (still called Jobs in older versions), every resource hour, item issue, and GL expense can be posted against a job and a job task, with separate budget and billable plans. Work-in-progress (WIP) journals defer cost to the balance sheet until revenue is recognised on completion or percentage-of-completion. Job costing is essential for professional services, construction, engineering, installation, and any business where work is delivered as discrete engagements.

In practice, the WIP journal is what makes job costing genuinely different from simply tagging GL transactions with a job number: costs incurred on an in-progress job sit on the balance sheet as an asset rather than hitting the income statement immediately, and only move to cost of goods sold or cost of services when revenue is actually recognised. Get this wrong — recognise cost before revenue, or the reverse — and a project's profitability looks distorted mid-stream even though the underlying work and billing are both on track.

Where confusion shows up: a job's budget and its billable plan are two separate things that often diverge on purpose — the budget tracks what the work is expected to cost internally, while the billable plan tracks what will actually be invoiced to the customer, and the gap between them is the project's expected margin. Fixed-price and time-and-materials engagements handle this differently: a fixed-price job's margin depends entirely on controlling actual cost against a budget that can't move, while a time-and-materials job's margin is largely protected by the billing rate itself, which is why the two contract types need different cost-control discipline even inside the same job-costing module.