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The traces and accumulation of direct costs and allocation of indirect costs of a manufacturing process are done by an accounting methodology known as Process Costing. Usually in large batches, products are allocated certain costs which might include an entire month’s production. Job Costing attempts to measure the individual cost of production of each unit.Process Costing Assignment Help Online Service shows that Process Costing is the complete opposite of Job Costing where in Process Costing; it allocates average cost to each unit. Process Costing is a method of assigning or allocating costs to units of homogeneous products produced in companies in large quantities. A type of operation costing which is used to determine the cost of a product at each process or stage of manufacture is known as Process Costing. As according to CIMA, Process Costing method is applicable in the areas where goods or services are resulted from a sequence of continuous process or repetitive operations. This process can be considered as sub-unit of organization defined specifically for cost collection process.
Importance Application and Reasons for Use of Process Costing
The importance of Process Costing is explained in details by Process Costing Assignment Help Online Service.In order to keep the track of where the money is being spent in production and distribution process, the companies engage an important process known as Process Costing. Understanding the costs in the first step is controlled by them. Process Costing, method differs from other costing methods like Job Costing methods. In case of Process Costing method, it uses less bookkeeping as compared to Job Costing method. The unit costs are more like averages in Process Costing.
Process Costing is appropriately applicable in companies that produce a continuous mass of homogeneous units through series of continuous operations and processes. Process Costing is also used when one order doesn’t affect the production process and existence of standardization of process and products. The Process Costing system can never provide sufficient product cost information, if there are significant differences among the costs of various products.
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The various reasons for the use of Process Costing are given in details by Process Costing Assignment Help Online Service.
• Though products are manufactured in large quantities, yet the products should be sold in small quantities like one at a time, a dozen or even two at a time.
• Using Process Costing in companies, the companies can produce large units of items or products at a time, probably thousands or millions of units.
• Helps the manager to preserve cost control over manufacturing process.
• Process Costing allows the giving of values to the materials which part ways through a process.
• In order to achieve proper matching of product costs against related sales revenue, Process Costing is required.
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