Methods of Costing

The methods of analyzing and presenting the cost vary from industry to industry.However, the basic principles of ascertaining costs are the same in every system of cost accounting.

1. Job Costing: Job costing is used where production is not repetitive and is done against orders. The work is usually carried out within the factory. Each job is treated as a distinct unit, and related costs are recorded separately.

2. Process Costing: Where an article has to undergo distinct processes before completion, it is often desirable to find out the cost of that article at each process.A separate account for each process is opened and all expenditure is charged thereon. The cost of the product at each stage is, thus accounted for. The output of one process becomes the input to the next process. Hence, the process cost per unit in different processes is added to find out the total cost per unit at the end.

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