Process Costing
P E S Institute of Technology
Department of MBA
100 Feet Ring Road, BSK III Stage, Bangalore – 560 085
A TERM PAPER
On
Process Costing
Submitted in fulfillment of the requirements for the 3rd SEM MBA Management Accounting and Control Systems
Submitted to: Submitted by:
Prof. G V M Sharma Vandana Rajput Dept. of MBA 1PB11MBA60
INTRODUCTION:
Process costing is a form of operations costing which is used where standardized homogeneous goods are produced. This costing method is used in industries like chemicals, textiles, steel, rubber, sugar, shoes, petrol etc. Process costing is also used in the assembly type of industries also. It is assumed in process costing that the average cost presents the cost per unit. Cost of production during a particular period is divided by the number of units produced during that period to arrive at the cost per unit.
MEANING OF PROCESS COSTING:
Process costing is a method of costing under which all costs are accumulated for each stage of production or process, and the 2 cost per unit of product is ascertained at each stage of production by dividing the cost of each process by the normal output of that process. Definition:
CIMA London defines process costing as “that form of operation costing which applies where standardize goods are produced” (a) The production is continuous
(b) The product is homogeneous
(c) The process is standardized
(d) Output of one process become raw material of another process
(e) The output of the last process is transferred to finished stock
(f) Costs are collected process-wise
(g) Both direct and indirect costs are accumulated in each process
(h) If there is a stock of semi-finished goods, it is expressed in terms of equalent units
(i) The total cost of each process is divided by the normal output of that process to find out cost
Department of MBA
100 Feet Ring Road, BSK III Stage, Bangalore – 560 085
A TERM PAPER
On
Process Costing
Submitted in fulfillment of the requirements for the 3rd SEM MBA Management Accounting and Control Systems
Submitted to: Submitted by:
Prof. G V M Sharma Vandana Rajput Dept. of MBA 1PB11MBA60
INTRODUCTION:
Process costing is a form of operations costing which is used where standardized homogeneous goods are produced. This costing method is used in industries like chemicals, textiles, steel, rubber, sugar, shoes, petrol etc. Process costing is also used in the assembly type of industries also. It is assumed in process costing that the average cost presents the cost per unit. Cost of production during a particular period is divided by the number of units produced during that period to arrive at the cost per unit.
MEANING OF PROCESS COSTING:
Process costing is a method of costing under which all costs are accumulated for each stage of production or process, and the 2 cost per unit of product is ascertained at each stage of production by dividing the cost of each process by the normal output of that process. Definition:
CIMA London defines process costing as “that form of operation costing which applies where standardize goods are produced” (a) The production is continuous
(b) The product is homogeneous
(c) The process is standardized
(d) Output of one process become raw material of another process
(e) The output of the last process is transferred to finished stock
(f) Costs are collected process-wise
(g) Both direct and indirect costs are accumulated in each process
(h) If there is a stock of semi-finished goods, it is expressed in terms of equalent units
(i) The total cost of each process is divided by the normal output of that process to find out cost