Job, batch, and process costing is a very important chapter for the MA1 exam, In this article, you will know every basic about Job, Batch, and process costing.

What Is The Job Costing System In Accounting

It is a cost unit that consists of a single order or contract. Job costing is the costing which attributes to separate jobs.

What is the job costing aim?

  1. Direct material, labor, and expense =Prime cost
  2. Production overhead
  3. Total cost
  4. Admin and selling overheads
  5. Cost of sales

Job Costing and Computerization

The job cost card exists in a manual system, but in a large organization, the job costing system must be computerized. As the world is now digital and business is now shifting to E-Business so records must be accurate and stay updated for that computerized system is so needful in today’s growing world.

A job costing system is also used to record and control the cost of the internal service department just like the maintenance department.

Importance and benefits of job costing

Job costing helps in the following scenarios that are very useful for a business:

  1. It helps in tracking the accurate cost associated with a specific order
  2. It helps to decide a better price decision
  3. It helps to improve project management
  4. Helps in deciding the amount that should be charged for a specific order.

What is purpose of job order costing

The purpose of job costing is to decide how much amount should be charged to a specific order, it helps to decide whether a job order should be taken or not on the bases of expense calculation that can occur during the completion of an order. It also helps in improving the performance of a business.

What Is Batch Costing In Accounting

Batch costing is similar to job costing in that every batch of similar articles is individually identifiable. The cost per unit in a batch is the total batch cost divided by the number of units in a batch.

It is a form of specific order costing in which costs are attributed to batches of the products.

Importance and benefits of batch costing

It is also an important part of business costing as it helps to track the cost of identical units on the bases of groups. It helps to control the cost and inventory management can be better with this costing method.

The batch costing method is very useful when making the budget as it gives a more accurate budget for a group.

What is the purpose of batch costing

The main purpose of batch costing is to track the cost of a group of units, under one group. It helps a business in better charging decisions.

What Is Process Costing In Accounting

Process costing is the method that shows a continuous process. It attributes to the units produced during a specific period.

It is the process of continuous identical units

What are the process costing features

It determines the cost of a unit from a continuous process, It is common to identify costs with continuous products such as the following,

  1. Oil refining
  2. Sugar refining
  3. Chemical processing
  4. Brewing

There is often a loss during the process because of spoilage, evaporations, and so on,

The output of one process becomes the input of the next until the final product is ready.

What Are The Basics of process costing

Here are some basics steps to deal with process costing, follow them when you are dealing to process costing.

  1. Determine the output and losses
  2. Calculate cost per unit and output
  3. Calculate the total cost of completed output and WIP (Work In Progress)
  4. Complete account

Importance and benefits of process costing

Process costing is very useful when a business operates in different centers, it helps in improving the production centers and costs that associate with different stages in a process of production.

What is purpose of process order costing

The main purpose of process costing is to know the performance of a single stage and how effectively it works. It helps to minimize the risk of wastage during the production process.

Difference Between Job Batch And Process Costing

Job costing is used for a specific order whereas batch costing is used for a group of identical units and process costing is used when a product has to go through a number of different stages to become finished goods.


What is the importance of job costing and how it helps a business?

Job cost plays an important role when a business works on a particular or on special order, it helps a business to know how much material, labor cost, and expense is occurred in completing a single job.

How many types of costing are there in the management of the production process?

There are two types of cost in production, job costing and process costing.

What are the advantages of job costing?

There are many advantages of using a job costing system, one of the major benefits of job costing is it helps to know the total expense of a particular job or product.

What are the benefits of using process costing and how it helps a business to improve efficiency and productivity?

Using process costing helps to know the actual performance and expense of a single stage of production. Process costing helps a business control the whole expense in manufacturing and completing the production work. Using this process in costing a business can improve the cost, efficiency, and productivity of a business or it can also help to improve a particular stage in the production center.

What is abnormal wastage?

When the wastage is more than expected, it is said to be an abnormal loss or wastage.

Why should study job batch and process costing?

It is important to know the better performance of a single product in different ways.

Do job batch and process costing topic helps in the MA2 exam?

Yes, job batch and process costing is a major topic in management accounting, it will also examine in the F2 ACCA paper.

How many questions of job batch and process costing can examine in the MA1 exam?

4 to 5 questions always occur in the paper from the job batch and process costing chapter.

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