This episode of our podcast explains job order costing, a method of assigning costs to individual projects. It contrasts job order costing with process costing, highlighting their differences in applications and cost accumulation. The chapter details the three major components of product costs—direct materials, direct labor, and overhead—and illustrates how to track these costs through a job's lifecycle. Furthermore, it covers the calculation and application of predetermined overhead rates, addressing both underapplied and overapplied overhead. Finally, the text demonstrates job order costing's application in non-manufacturing environments like service industries.