MEANING OF PROCESS COSTING
- Process Costing is a method of costing used in industries where the material has to pass through two or more processes for being converted into a final product.
- It is defined as “a method of Cost Accounting whereby costs are charged to processes or operations and averaged over units produced”.
- A separate account for each process is opened and all expenditure pertaining to a process is charged to that process account. Such type of costing method is useful in the manufacturing of products like steel, paper, medicines, soaps, chemicals, rubber, vegetable oil, paints, varnish etc. where the production process is continuous and the output of one process becomes the input of the following process till completion.
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