Question

Write short notes on Features of Process Costing.

Answer 1

Process Costing

Process costing is a method of operation costing which is used to ascertain the cost of production at each process, operation or stage of manufacture, where processes are carried in having one or more of the following features:

i. Where the product of one process becomes the material of another process or operation

ii. Where there is simultaneous production at one or more process of different products, with or without by product,

iii. Where, during one or more processes or operations of a series, the products or materials are not distinguishable from one another, as for instance when finished products differ finally only in shape or form’.

• “A method of accounting whereby costs are charged to processes or operations and averaged over units produced;
• it is employed principally where a finished product is the result of a more or less continuous operation, as in paper mills, refineries, canneries and chemical plants; distinguished from job costing,
• where costs are assigned to specific orders, lots or units.