What is Process Costing?

Activity Based Costing
Knowledge Center

Forum

New Topic

hiba
Jordan

What is Process Costing?

🔥NEW In cost accounting systems, what is process costing?

  Jaap de Jonge
Editor, Netherlands
 

Process Costing

Process costing in cost accounting and management accounting is one method for collecting and assigning manufacturing costs to the units produced. Processing cost is used when identical or nearly identical units are mass produced, where the costs associated with individual units of output need not be differentiated from each other. The cost of each product produced is assumed to be the same as the cost of every other product.
Producing the products may require several processing operations, which are being added to the cost of the products.
Process costing is a method of assigning costs to units of production in companies producing large quantities of homogeneous products. It is applicable where goods or services result from a sequence of continuous or repetitive operations or processes. Costs are averaged over the units produced during the period. Typical examples of industries where process costing occurs are manufacturers where production is a continuous flow, such as food production and manufacturing of cosmetics.
When the units manufactured vary significantly from one another, Job Order Costing is used instead.

Start a new forum topic

 

More on Activity Based Costing:
Summary
Special Interest Group

Do you have a keen interest in Activity Based Costing? Become our SIG Leader

Activity Based Costing
Knowledge Center



About 12manage | Advertising | Link to us / Cite us | Privacy | Suggestions | Terms of Service
2021 12manage - The Executive Fast Track. V15.8 - Last updated: 4-12-2021. All names of their owners.