By entering the components of a product into an assembly and its operations into a route it is possible to roll up the cost of the assembly components, add on the planned labour and overhead costs and calculate an "expected" cost for the product. This standard cost of the assembly is often set as this expected cost.
However, in practice the actual cost of producing a batch of the items may differ considerably from that expected. Components may be scrapped, for example, or operations take longer than planned. Or perhaps a job is completed more quickly than normal.
The Shop module's job costing options and reports allow the time taken on a works order to be recorded, and by analysing the time taken and components issued to the order, Herschel can calculate the actual cost of producing the works order. This can then be compared against the expected cost, and if the two differ a lot then steps can be taken to find out why.
Job costing "closes the loop" of the manufacturing process. By monitoring job costs both assembly and route accuracy can be assessed, corrected and as a result standard costs can be made more accurate. Sales margins and profitability can be assured.