Job, Batch and process costing is very important chapter for MA1 exam, In this article you will know every basics about Job, Batch and process costing.
What is job costing?
It is a cost unit which consist of a single order or contract. Job costing is the costing which attributes to separate job.
Job Costing Aim
- Direct material, labor and expense =Prime cost
- Production overhead
- Total cost
- Admin and selling overheads
- Cost of sales
Job Costing and Computerization
The job cost card exist in manual system, but in 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 updates for that computerized system is so needful in today’s growing world.
Job costing system is also used to record control the cost of internal service department just like maintenance department.
Batch costing is similar to job costing in that every batches of similar articles is individual identifiable. The cost per unit in a batch is the total batch cost divided by the number of the units in a batch.
It is a form of specific order costing in which cost are attributed to batches of the products.
Process costing is the method which show a continuous process. It attributes to the units which produces during a specific period.
It is is the process of continuous of identical units
Process Costing Features
It determine the cost of a unit form continuous process, It is common to identify costing with continuous production such as the following,
- Oil refining
- Sugar refining
- Chemical processing
There is often a loss during the process because of spoilage, evaporations and so on,
The output of one process becomes input to the next until the final product is ready.
Basics of process costing
Here is some basics steps to deal with the process costing, follow it when you are dealing to process costing.
- Determine the output and losses
- Calculate cost per unit and output
- Calculate total cost of completed output and WIP (Work In Progress)
- Complete account
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ACCA Exam practice (FA1 and MA1)
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