Job shop or process line: the books have to match the floor
A fabricator building one-off conveyor frames and an extruder running the same profile all week are both manufacturers, and they need different books. Build-to-order work calls for job costing: each order carries its own material, labour hours and overhead, and you learn whether that order paid. Repetitive production calls for process costing: costs pool by stage and spread across units, and the question becomes what a unit cost this month and why it moved. Plenty of Ontario shops are honestly a hybrid, catalogue products plus custom work, and the books should admit that instead of forcing everything through one method.
| Costing question | Job costing | Process costing |
|---|---|---|
| Fits | Custom and build-to-order work, short runs | Repetitive runs and continuous lines |
| Cost object | The individual job or order | The production stage, then the unit |
| The margin answer | Did this order make money? | What did a unit cost this month? |
| Failure mode | Overhead never lands on jobs, so quotes fly blind | Scrap and downtime disappear into the average |
Overhead absorption: the rate behind every quote
Rent, hydro, supervision, maintenance and equipment depreciation only reach your prices through an absorption rate, and in many small plants nobody has recalculated that rate in years. We build it from your actual cost base, per machine-hour or per direct-labour-hour depending on what drives the work, and split it by department where a laser cell and a paint line carry very different burdens.
Then we watch under-absorption monthly. If the plant spent more overhead than the jobs recovered, either volume fell or the rate has gone stale, and both are pricing problems you want to hear about in March rather than at year-end. That review is the difference between books that record the plant and books that steer it.
WIP and inventory you can defend at year-end
Whatever sits unfinished on the floor at year-end has to be valued with material, labour and a reasonable share of overhead, on a method applied consistently from one year to the next. That is not a formality. WIP is where a manufacturer's profit figure is won or lost, because a sloppy count swings income in either direction and invites questions you do not want.
We set up cycle counting so the annual count stops being a two-day shutdown, keep bills of materials current so the costs rolling off them mean something, and run a slow-moving stock report so obsolete inventory gets identified item by item through the year. That last habit matters: the writedown rules the CRA applies are specific, and we build the supporting file alongside the corporate tax filing so the deduction survives a second look.
Payroll that feeds the costing
Because books and payroll run under one roof in End-to-End Accounting, the labour rates in your costing are the rates you actually pay. Shift premiums for the afternoon and night crews belong in the loaded rate, overtime in Ontario runs at time and a half after 44 hours in a week, and the statutory load rides on top: CPP and EI, WSIB premiums at your manufacturing rate class, and Employer Health Tax once payroll clears the $1 million exemption.
A quoted labour rate that ignores those add-ons undercharges every hour the plant sells. We keep the loaded rate current and push it back into the quoting model whenever wages, premiums or WSIB rates move.
The stack, the close and the HST return
QuickBooks Online on its own treats inventory as a list, not a build. A manufacturer needs an MRP layer such as Katana, Fishbowl or Cin7 Core carrying the bills of materials, WIP and finished goods, synced to QuickBooks Online as the ledger, with Dext capturing supplier documents and Plooto running the payment batch. We set that integration up and reconcile it monthly, so the floor and the ledger stop being two versions of the truth.
The close ties it together: inventory reconciled, absorption reviewed, margin reported by product line, and the HST return filed on facts. For delivered goods the rate follows the destination, 13% to an Ontario customer, 5% GST on a shipment into Alberta, and export sales are zero-rated with documentation requirements that deserve professional attention before the first big order ships. For a Mississauga plant selling across the country, that return is rarely as simple as it looks.
