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 job costing?

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

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.

Batch Costing

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.

Process Costing

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

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.

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

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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 a 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.

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