Process costing is a method used in manufacturing where units are mass produced through continuous processes. In process costing, the total cost is averaged over total units produced rather than tracking costs of individual jobs (like in job costing). Key terms include normal loss (expected waste), abnormal loss/gain (unexpected variance from normal), work in progress, equivalent units, and scrap value. To calculate cost per unit, total costs are divided by total equivalent units after accounting for opening/closing work in progress, normal/abnormal losses/gains, and scrap value if any.