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Batch costing is a record of items manufactured by the business for the reason of stocking. It is a part of cost accounting and specific to time. Batch costing is a complex subject and understanding the concepts of batch costing might be difficult for students. As such, student may need professional batch costing assignment help.
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Batch costing is a modified version of job costing. The term batch refers to a ‘lot’ in which products or articles are to be manufactured. When a particular product is manufactured, one unit is not produced rather a lot of say 500 or 1000 units of that particular product is produced. Hence batch costing is also termed as ‘lot costing’. This process of costing is used in drug industries, garment factories, manufacturing component parts of watches, televisions, auto parts etc.
The costing process of batch costing is similar as job costing except that here a batch becomes the cost unit instead of a job. Separate cost sheets are prepared for each batch of products manufactured by the company and each batch is assigned a number. Cost per unit is calculated by dividing the total cost of a batch by the number of items produced in that batch. Material, direct labour and overhead are assigned batch wise.
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Types of cost involved in batch costing
Set up cost and carrying costs are the type of cost involved in batch costing. With the increase in batch size the set up cost per unit will decrease and the carrying cost will increase and vice versa.
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