Cost Accounting , Process Costing

1. PRESTIGE INSTITUTE OF MANAGEMENT
GWALIOR (M.P)
By = Shivam Sharma
MBA ( int. )

2. Introduction
of process
costing
Features of
process of
costing
Advantage &
limitations of
process
costing
Purpose of
process
costing

3. Introduction of process costing
• Process costing is a method of costing used to find out the cost of the
product in each process.
• It is used to calculate cost per unit of product is ascertained at each
stage of production.
• It is a form of operations costing.
• Process costing is used in industries like chemicals, textiles, steel,
rubber, sugar, shoes, petrol, etc.

4. Features of process costing
• The production is continuous.
• The product is homogeneous.
• The product is standardized.
• Output of one process become raw material of another process.
• Costs are collected process-wise.
• The total cost of each process is divided by the normal output of that
process to find out cost per unit of that process.

5. Advantages & limitations of process
costing
• Periodical determination of cost
• Simple and cheap
• Managerial control
• Standard processes and products
• No detailed analysis
• Historical costs
• Estimates
• Difficult to calculate average cost where
more than one type of products is
manufactured.
ADVANTAGES LIMITATIONS

6. Purpose of process costing
• To control the process
• To know cumulative cost
• To calculate the value of inventory of raw material, work-in-progress
and finished goods at the end of the period.
• It is also used to assign price of the products.