What is process costing and the methods used

A procedure bing method is used for Indus fast one bring forthing chemical, crude oil, fabric, and flour, pharmaceutical, shoos and coal. This type of costing is besides used by houses fabricating such things methods is the assembly type industry which manufactures such things as type authors, cars. Airplanes and house hold electric contraptions. Finally certain service industries, such sagas, H2O, and heat, cost their merchandises by utilizing procedure bing methods. In fact procedure bing process are frequently termed ” uninterrupted or mass production cost accounting process.

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What Is Process Costing?

Procedure costing is a type of bing system that is used for unvarying, or homogenous, merchandises. Procedure bing norms the costs over all units to come to the per unit cost. This is in contrast to other types of bing systems, such as job-order costing that is used for merchandises that are in differentiated batches. Unlike job-order costing, procedure costing is tracked utilizing a work-in-process history for each section, instead than through subordinate legers ]

Procedure Costing

In accounting, procedure costing is a method of delegating production costs to units of end product. In procedure bing systems, production costs are non traced to single units of end product. Costss are assigned first to production sections and so to units of end product as they move through the sections. The procedure bing method is typically used for procedures that produce big measures of homogenous merchandises.

The procedure bing method is in contrast to other bing methods, such as merchandise costing, occupation costing, or operation bing systems. Using the procedure bing method is optimum under certain conditions. If the end product merchandises are homogenous, that is, the units of end product are comparatively identical from one another, it may be good to utilize procedure costing. If the end product merchandises are of low value, intending each single unit of end product is non deserving much, it may be good to utilize procedure costing. And if it is hard or impracticable to follow production costs straight to single units of end product, it may be good to utilize the procedure bing method.

Examples of operations that are likely to utilize the procedure bing method as opposed to another bing method include a Cola bottling works, a breakfast cereal shaper, a company that makes computing machine french friess, and company that produces lumber, and a company that produces bricks. For illustration, for the company that bottles Cola, it would non be executable or worthwhile to divide and enter the cost of each bottle of Cola in the bottling procedure. Therefore, the company would delegate costs to the bottling procedure as a whole for a period of clip, and so split that overall procedure cost by the figure of bottles produced during that period of clip to delegate production costs to each bottle of Cola.

Procedure Costing Method

5 Stairss for Process Costing

1. Analyze stock list flow

2. Convert in-process stock list to equivalent units

3. Calculate all applicable costs

4. Calculate the cost per unit of finished and in-process stock list

5. Allocate costs to units of finished and in-process stock list

First, analyse the cost-flow theoretical account of the relevant stock list history to find how much stock list was at that place at the beginning of the period, how much was started during the period, how much as completed during the period, and how much is left as work-in-process at the terminal of the period.

Second, change over the work-in-process stoping stock list into a figure of tantamount units produced. This means if there are 1,000 units of stock list in work-in-process, and these units are all 50 % complete, so you consider this as the equivalent of 500 units produced ( 500 = .50 x 1,000 ) .

Third, compute the entire direct and indirect costs incurred by the production procedure that need to be assigned to the units completed and the units still in procedure. This includes the costs associated with the get downing stock list and the costs incurred during the relevant period.

Fourth, calculate the sum of cost to be assigned to the completed units of end product and the equivalent of completed units of end product still in the stoping stock list. For illustration, if 2,000 units were completed, and 1,000 units were left half-finished, so you would split the applicable costs by 2,500 units.

Fifth, allocate the relevant costs to the units of merchandise that were completed and to the units of merchandise that remain in the work-in-process history.


Hilton, Ronald W. , Michael W. Maher, Frank H. Selto. “ Cost Management Strategies for Business Decision ” , Mcgraw-Hill Irwin, New York, NY, 2008.

Procedure Costing Procedures

Procedure bing systems follow specific processs, and while exact processs may change by company or by industry, they will by and large follow these stairss:

While other types of bing start with a gross revenues order, a gross revenues order is non needed for procedure costing as it is a uninterrupted procedure

The work-in-process histories are divided by section and are named as such – for illustration: Work-in-process – Department Name

The first section in the procedure makes the first entry into the work-in-process history, by and large for the direct natural stuffs

As the merchandises move from section to section, entries are made to each work-in-process section history

Direct labour costs are recorded by period

Actual operating expense costs are recorded ; no contra-account is needed because there is no over- or under-applied operating expense due to the existent cost being applied

Indirect costs are applied to the overhead history in existent sums

Normal spoilage is recorded as a cost to the work-in-process history ; unnatural spoilage is removed from the work-in-process history and applied to a separate history so it can be addressed by direction.

When Is Process Costing Appropriate?

Procedure costing is appropriate when merchandises are homogenous ( or indistinguishable ) . Where job-order and other types of bing seek to happen the cost per unit for batches of differentiated merchandises, procedure bing seeks to happen the mean cost of all units over a period of clip. Therefore, procedure costing is merely appropriate when all units are the same. For illustration, a fabrication company that produces merely one homogenous merchandise may elect to utilize procedure costing.

Features and procedure of costing.

The features of procedure bing are:

A cost of production study is used to roll up, sum up, and compute sum and unit cost.

Production is accumulated and reported by sections.

Costss are posted to departmental work in procedure histories.

Production in procedure at the terminal of a period is restated in footings of completed units.

Entire costs charged to a section are divided by entire computed production of the section in order to find a unit cost for a specific period.

Costss of completed units of a section are transferred to the following processing section in order to get at the entire costs of the finished merchandises during a period. At the same clip, costs are assigned to units still in procedure.

Features and process.

Accumulate stuff, labour, and mill over caput costs by sections.

Determine a unit cost for each section.

Transportation costs from one section.

Assign seashore to the stock list of work still in procedure.

If accurate unit and stock list costs are to be established by procedure costing process, costs of a period must be identified with units produced in the same period.

Features/Characteristics of Process Costing



Procedure Costing Method is applicable where the end product consequences from a sequence of uninterrupted or insistent operations or procedures and merchandises are indistinguishable and can non be segregated.

Procedure Costing enables the ascertainment of cost of the merchandise at each procedure or phase of industry.

The undermentioned characteristics may be identified with procedure costing:

The end product consists of merchandises which are homogeneous.

Production is carried on in different phases ( each of which is called a procedure ) holding a uninterrupted flow.

Production takes topographic point continuously except in instances where the works and machinery are shut down for care etc. Output is unvarying and all units are indistinguishable during each procedure. It would non be possible to follow the individuality of any peculiar batch of end product to any batch of input.

The input will go through through two or more procedures before it takes the form of the end product. The end product of each procedure becomes the input for the following procedure until the concluding merchandise is obtained, with the last procedure giving the concluding merchandise.

The end product of a procedure ( except the last ) may besides be salable in which instance the procedure may bring forth some net income.

The input of a procedure ( except the first ) may be capable of being acquired from the outside beginnings.

The end product of a procedure is transferred to the following procedure by and large at cost to the procedure. It may besides be transferred at market monetary value to enable look intoing efficiency of operations in comparing to the market conditions.

Normal and unnatural losingss may originate in the procedures

There are a figure of industries in which procedure costing can be applied.

Elements/Components of Cost



procedure, cost, accounting, entering, direct, indirect, costs

For the intent of cost accounting, the procedure industry is divided into separate sections with each section stand foring a specific procedure. The Direct Material and Direct Labor/Labor Costss are collected for each section individually and the operating expenses which are collected over all the departments/processes are apportioned over the assorted departments/processes on some rational footing.

The followers are the chief elements/components of costs involved in the fabrication procedure where procedure bing method is adopted.

Direct Materials

There are two types of stuffs that we come across in procedure costing.

Primary Material

Materials which are introduced in the initial procedure and passed on to the following procedure as a portion of end product after completion of processing.

Secondary Material

Materials which are introduced in the first or subsequent procedures in add-on to the chief stuff introduced in the initial procedure. This gets assorted up with the chief stuff and is passed on to the subsequent processes as a portion of the end product.

Direct Labor/Labor

The direct labour/labor cost is by and large incurred in every procedure. Designation of direct labor cost is besides comparatively easy in procedure costing industry

Direct Expenses

Expenses in add-on to Direct Material and Labor which can be straight attributable to a peculiar procedure. These are costs relevant to specific procedures.

Production Operating expenses

The operating expense disbursals are by and large expended over all the procedures involved in production. These are to be apportioned over the assorted procedures in an amicable mode.

Methodology of Recording/Accounting Costss



Fiscal Accounting Methodology is adopted for entering costs involved.

Procedure Histories

A nominal history for each procedure is used to enter all the costs relevant to a procedure.

Each procedure history is

Debited with

The Primary Direct Material Cost

Secondary Direct Material Cost

Direct Labor Cost

Direct Expenses and

Production Overheads allocated and/or apportioned to the procedure.

Credited with

The value of end product transferred to the subsequent procedure or finished stocks.

Numbers, Alphabets or any word or phrase stand foring the procedure are used as suffixes/prefixes in the names ( “ Process I a/c ” , “ Process A a/c ” , “ Refining Process A a/c ” , … etc. , . ) to clearly place the procedures histories.

Process Stock Histories

Stockss relevant to a procedure are maintained in a separate stock history.

Stock histories for input may be maintained where all the input acquired/received for a procedure during a period is non used up.

Stock histories for end product may be maintained where all the end product produced/completed in a procedure during a period is non disposed off either by transportation to the following procedure or by sale.

Where the end product relevant to a procedure is sold apart from being transferred to the following procedure, it generates gross. These grosss relevant to a procedure, are by and large recorded utilizing the procedure history or the stock history.

procedure, cost, accounting, entering, methodological analysis, stuff, labour, operating expenses

Procedure Account A» Format




Procedure I a/c




( in Unit of measurements )


( in Rs )



( in Unit of measurements )


( in Rs )

To Direct Material

To Other Material

To Direct Labour/Labor

To Production Overheads






By Process II a/c















FEATURES of Process Costing

The merchandise of one procedure becomes the INPUT OR RAW MATERIAL of the following procedure ;


It is DIFFICULT TO IDENTIFY A COST UNIT because each cost unit is portion of a procedure ;

It is hard to be a cost unit hence we can merely happen the Average COST PER UNIT over period of clip ;

Cost CENTRES are set up and costs are collected by the cost centres ;

It is possible that Joint PRODUCTS may be produced in the procedures ;

WASTE may originate during treating eg due to vaporization, etc

Each procedure or section performs a peculiar operation ( s ) . A certain phase of production is completed in each procedure. Each procedure is carried out by a certain section. A individual is normally responsible for a procedure.

An history called a PROCESS ACCOUNT is maintained for each procedure. This procedure history captures/records the followers:

All costs-materials, labour and operating expenses ;


End product

Opening work-in-process

Closing work-in-process

Transportations from old procedure

Losingss or additions

Reasons for usage

Companies need to apportion entire merchandise costs to units of merchandise for the undermentioned grounds:

A behaviors are manufactured in big measures, but merchandises may be sold in little measures, sometimes one at a clip ( cars, loaves of staff of life ) , a twelve or two at a clip ( eggs, cookies ) , etc.

Merchandise costs must be transferred from Finished Goods to Cost of Goods Sold as gross revenues are made. This requires a right and accurate accounting of merchandise costs per unit, to hold a proper matching of merchandise costs against related gross revenues gross.

Directors need to keep cost control over the fabrication procedure. Procedure bing provides directors with feedback that can be used to compare similar merchandise costs from one month to the following, maintaining costs in line with jutting fabricating budgets.

A fraction-of-a-cent cost alteration can stand for a big dollar alteration in overall profitableness, when selling 1000000s of units of merchandise a month. Directors must carefully watch per unit costs on a day-to-day footing through the production procedure, while at the same clip covering with stuffs and end product in immense measures.

Materials portion manner through a procedure ( e.g. chemicals ) might necessitate to be given a value, procedure costing allows for this. By finding what cost the portion processed stuff has incurred such as labour or overhead an “ tantamount unit ” relation to the value of a finished procedure can be calculated.


Similarities between occupation order and procedure bing include:

Both systems have the same basic purpose-to calculate unit cost

Both systems use the same fabrication histories

The flow of costs through the fabrication histories is fundamentally the


However, there are some of import differences between occupation order and processing costing as described below.

Job Order Costing

Procedure Costing

Each occupation is different

All merchandises are indistinguishable

Costss are accumulated by occupation

Costss are accumulated by section

Costss are captured on a occupation cost sheet

Costss are accumulated on a section production study

Unit of measurement costs are computed by occupation

Unit of measurement costs are computed by section

Analyze the production flow and the cost flows of companies which use procedure costing in Exhibits 4-2, 4-3, and 4-4. Note that as units are partly completed in one section they proceed onto another section for farther processing. This will necessitate a journal entry such as:

Work in Process – Department B

Work in Process – Department Angstrom

When the merchandises are completed they are transferred from the concluding processing section to Finished Goods. Study the model journal entries on Pages 149-150.

A complication originating in procedure costing is that non all units may be completed at the balance sheet day of the month. To cipher unit costs, it will be necessary to calculate tantamount units of production. Equivalent units can be defined as the merchandise of the figure of partly completed units times the per centum completion of these units. If there are 300 of partly completed units at year-end which are 40 % complete, so there are 120 tantamount units. If say 5000 units were completed during the period, the managerial comptroller would add 5000 and 120 to get at 5120 tantamount units completed during the period. Then entire section costs for the period ( direct stuff, direct labour, and operating expense ) would be divided by the 5120 tantamount units to get at cost per unit.A Equivalent units can be computed in two different ways, the leaden mean method and the FIFO method.A We merely cover the leaden mean method in this class and hence skip Appendix 4A.


Companies utilizing procedure bing prepare departmental production reports.A Exhibit 4-9, Page 158, is a production study for Double Diamond Skis ‘ Shaping and Milling Department.A Note that the production study consists of three parts as follows:

A A A 1.A A measure agenda which shows the flow of units through the section and a

A A A A A A A calculation of tantamount units

A A 2.A A calculation of costs per tantamount unit

A A 3.A A rapprochement of all cost flows into and out of the section


Besides note in Exhibit 4-9 that the tantamount unit sums are different for stuff costs and for transition costs.A This often happens as all stuff is input at the start of the production procedure but the direct labour and overhead costs are incurred sometime later.A A

1. Procedure Costing Systems – What is it and when is it used?

Exemplifying procedure costing

2. Three instances

2.1 Case 1: Procedure Costing with no beginning or stoping work – in – procedure stock list

2.2 Case 2: Procedure bing with no beginning but an stoping work – in – Procedure Inventory

2.3 Case 3: Procedure bing with both get downing and stoping work – in – procedure stock list

3. Weighted-average method

4. First-In, First-out Method

5. Transferred-in costs in procedure costing

5.1 Transferred-in Costss and the weigthed-average method

5.2 Transferred-in Costss and the FIFO-Method

6. Common Mistakes with Transferred-in Costss

7. Mention of beginnings used


1. Procedure Costing Systems – What is it and when is it used?

A process-costing system is a bing system in which the cost of a merchandise or service is obtained by delegating costs to multitudes of like or similar units. Unit of measurement costs are so computed on an mean footing. Process-costing systems are used in industries that produce like or similar units which are frequently mass produced. In these industries, merchandises are manufactured in a really similar manner. The companies normally use the same sum of direct stuffs, direct fabrication labour costs and fabricating overhead costs. Industries that use process bing systems are for illustration: chemical processing, oil refinement, pharmaceuticals, plastics, brick and tile fabrication, semiconducting material french friess, drinks and breakfast cereals.

The difference between occupation bing and procedure costing is the extent of averaging used to calculate unit costs of merchandise and services. The cost object in occupation costing is a occupation that constitutes a clearly identifiable merchandise or service. The measure of fabrication resources is different in any occupation. It would be wrong to be each occupation at the same mean fabrication cost. So, when like or similar units are mass produced, procedure bing norms fabricating costs over all units produced.

The costs of a merchandise are of import for stock list computations, pricing determinations and merchandise profitableness analysis. It ‘s besides of import for mensurating how good the direction is done and if costs are reduced efficaciously.


Exemplifying procedure costing

The best manner to demo how process costing plants, is by illustration:

Global Defense, Inc, manufactures 1000s of constituents for missiles and military equipment. One of these is called DG-19. The product-costing system for DG-19 has a individual direct-cost scheme ( direct stuffs ) and a individual indirect-cost class ( transition costs ) . Each unit passes through two sections: the Assembly Department and the Testing Department. Every attempt is made to do certain that all DG-19 merchandises are indistinguishable. Direct stuffs are added at the beginning of the procedure in Assembly. Additional direct stuffs are added at the terminal of processing in the Testing Department. Conversion costs are added equally during both procedures. They include fabricating labour, indirect stuffs, energy, works depreciation and so on. After go forthing the Testing Department, the DG-19 constituent is transferred to Finished Goods.


2. Three instances

2.1 Case 1: Procedure Costing with no beginning or stoping work – in – procedure stock list

During January, the first month of the period, Global Defense starts with the fabrication procedure. All units will get down and stop in this period. Altogether, Global Defense will fabricate 400 units of DG-19 during this period.

Direct stuffs in this period:

$ 32.000

Conversion costs in this period:

$ 24.000


Entire Assembly costs in January:

$ 56.000

Global Defense records direct stuffs and transition costs in the Assembly Department as these costs are incurred. By averaging, the assembly cost per unit would be $ 56.000 / 400 units = $ 140:

Direct stuffs costs by unit ( $ 32.000 / 400 )

$ 80

Conversion costs per unit ( $ 24.000 / 400 )

$ 60


Assembly Department cost per unit

$ 140

Each unit is indistinguishable in this instance, so we assume that all units receive the same sum of direct stuffs and transition costs. The unit costs can be averaged by spliting entire costs in a given accounting period by entire units manufactured. This attack is for illustration used by Bankss to calculate the unit costs of 100.000 similar client sedimentations made in a month. It is normally used by organisations with mass production of standard units and no uncomplete units after the period.


2.2 Case 2: Procedure bing with no beginning but an stoping work – in – Procedure Inventory

There is no get downing stock list in February, because all 400 units produced in January had been to the full completed. Due to client holds in puting orders, it was merely possible to bring forth 175 units in February.

The 225 partly assembled units as of February 28 were to the full processed with regard to direct stuffs, because all direct stuffs in the Assembly Department are added at the beginning of the assembly procedure. Conversion costs are added equally during the assembly procedure. Based on the work completed comparative to the entire work required to be done, an Assembly Department supervisor estimations that the partly assembled units were, on norm, 60 % complete as to transition costs.

Entire costs for February:

Direct stuffs costs in February

$ 32.000

Conversion costs February

$ 18.600


Entire Assembly Departments costs

$ 50.600

Problem: How should Global Defense cipher the cost of to the full assembled units and the cost of the partly assembled units still in procedure?

The undermentioned four stairss help us to happen the reply:

Measure 1:

Sum up the flow of physical unit of end product

Measure 2:

Compute end product in footings of tantamount units

Measure 3:

Compute tantamount unit costs

Measure 4:

Summarize entire costs to account for and delegate these cost to units completed and to units in stoping work in procedure

Measure 1 tracks the physical unit of end product. It shows, where they come from and how many units are at that place to account for, and where they go and how they are accounted for.

Measure 2 measures the end product in tantamount units, non in physical units, because non all units had been completed. The 400 units are complete in footings of tantamount units of direct stuffs, because all direct stuffs are added in the Assembly Department at the initial phase of the procedure. So you count all 400 units in tantamount direct costs.

The 175 to the full assembled units are wholly processed with regard to transition costs. The partly assembled units in stoping procedure are 60 % complete ( on norm ) . Therefore, the transition costs in 225 partly assembled units is tantamount to transition costs in 135 ( 60 % of 225 ) to the full assembled units. So, 310 tantamount units of transition costs are assembled and transferred out and 135 tantamount units are in stoping work – in – procedure stock list.

In measure 3, tantamount unit costs are computed by spliting direct stuffs and transition costs added during February by the related measure of tantamount units of work done in February:

Direct costs

Conversion costs

Costss added during February:

$ 32.000

$ 18.600

Divide by tantamount units work done in February:

/ 400

/ 300



Cost per tantamount unit of work done in February:

$ 80

$ 60

In Step 4, entire costs to account for are summarized and assigned to units completed and transferred out and to units still in procedure at the terminal of February. Since the get downing balance of the work – in – procedure is zero, entire costs to account for consist of the costs added during February: direct stuffs $ 32.000 and transition costs $ 18.600.

Direct stuff costs are 225 times $ 80 ( = $ 18.000 ) + Conversion costs: 135 times $ 60 ( = $ 8.100 ) . Entire costs are hence: $ 18.000 + $ 8.100 = $ 26.100.


2.3 Case 3: Procedure bing with both get downing and stoping work – in – procedure stock list

In March, Global Defense has 225 partly assembled units in the Assembly Department. During March, Global Defense placed another 275 units into production.

Measure 1 traces the physical units of production. In March, 400 units are completed and transferred out, 100units are in stoping stock list.

Measure 2 computes the end product in footings of tantamount units: 275 tantamount units of direct stuffs and 315 tantamount units of transition costs.

Measure 3 computes tantamount unit costs. Direct stuffs: $ 80 ; transition stuffs: $ 60

Measure 4 summarizes sum costs to account for and delegate these costs to units completed and to units in stoping work in advancement.

The costs that get assigned to each of these classs depend, as in all stock list accounting, on the specific premises sing the flow of costs. Following are described to alternate methods, the weighted-average method and the first-in, first-out method.


3. Weighted-average method

The weighted-average process-costing method assigns the mean tantamount unit cost of all work done to day of the month ( regardless of when it was done ) to equivalent units completed and transferred out, and to equivalent units in stoping stock list. The weighted-average cost is merely the norm of assorted tantamount unit costs come ining the work in procedure history.


4. First-In, First-out Method

The First-in, first-out ( FIFO ) process-costing method assigns the cost of the earliest tantamount units available ( get downing with the tantamount units in get downing work-in-process stock list. This method assumes that the earliest tantamount units in work in procedure – Assembly history are completed first.

5. Transferred-in costs in procedure costing

Transferred-in costs ( or old section costs ) are costs incurred in a old section that are carried frontward as portion of the merchandise ‘s cost as it moves to a subsequent section. That means, costs move with the units when they are transferred to a new section. So, calculations of Testing costs must include transferred-in costs, extra direct stuffs costs and transition costs added in Testing.

The four -step process is used to account for the costs of a subsequent section that has transferred-in costs. Unit of measurements are to the full completed as to transferred-in costs because these costs are merely carried frontward from the old procedure. Direct stuffs costs have a zero grade of completion in both beginning and stoping work-in-process stock lists, because in Testing, direct stuffs are introduced at the terminal of the procedure. That completes stairss 1 and 2.

5.1 Transferred-in Costss and the weigthed-average method

In measure 3, the tantamount unit costs are computed. In measure 4, the entire costs to account for are summarized, that is the entire debits to Work in Process under the weighted-average method. After that, these costs are assigned to units completed and to units in stoping work-in-process stock list. Get downing work in procedure and work done in the current period are totaled and merged together for intents of calculating weighted-average costs.

A company may divide the Work in Process history into Work in Process – Testing, Transferred-in Costs, Work in Process – Testing, Direct Materials and Work in Process – Testing, Conversion costs. The journal entries would incorporate this item, though the underlying logical thinking and techniques would be unaffected.


5.2 Transferred-in Costss and the FIFO-Method

The costs transferred-in from the Assembly Department are different when the weighted-average instead than the FIFO method is used in measure 3.

In measure 4, the entire costs to account for are summarized, dwelling of the beginning stock list plus costs added during the current period, under the FIFO-method. These costs differ from the entire debits to Work on Process under the weighted-average method, because of the different costs of completed units transferred-in from the Assembly Department under the weighted-average and FIFO methods.

When delegating costs, the FIFO method keeps the get downing stock list separate and distinguishable from the work done during the current period.

Each section in interdepartmental transportations is regarded as being separate and distinguishable for accounting intents. All costs transferred in during a given accounting period are carried at one unit cost figure, irrespective of whether old sections used the weighted-average or the FIFO method.


6. Common Mistakes with Transferred-in Costss

Here are some common booby traps to avoid when accounting for transferred-in costs:

Remember to include transferred-in costs from old sections in your computations. Such costs should be treated as if they were another sort of direct stuff added at the beginning of the procedure. In other words, when consecutive sections are involved, transferred units from one section go all or a portion of the direct stuffs of the following section ; nevertheless, they are called transferred-in costs, non direct stuffs costs.

In ciphering costs to be transferred on a FIFO footing, do non overlook the costs assigned at the beginning of the period to units that were in procedure but are now included in the units transferred.

Unit of measurement costs may fluctuate between periods. Therefore, transferred units may incorporate batches accumulated at different unit costs.

Unit of measurements may be measured in different footings in different sections. See each section individually. Unit of measurement costs could be based on kgs in the first section and litres in the 2nd, so as units are received by the 2nd section, their measurings must be converted to litres.


7. Mention of beginnings used

Example of an country where Process Costing is applied

A common illustration of an industry where procedure costing may be applied is “ Sugar Manufacturing Industry ” .

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The procedures in this industry are

Cane Shreding

The cane is broken/cut into little pieces to enable easy motion through the milling machine.


The chopped cane is passed through rollers which crush them to pull out cane juice. [ Similar to the cane juice extracted by the sellers who sell you sugar cane juice. ]

Heating and adding calcium hydroxide

The extracted juice is so heated to do it a dressed ore and calcium hydroxide is added to the heated juice.


Muddy substance is removed from the dressed ore through this procedure


Water is removed from the juice by vaporization.

Crystallization and Separation

Sugar crystals are grown from the dry juice dressed ore in this procedure.


Molassess are separated from sugar utilizing Centrifugals in this procedure.


Sugar is obtained by drying the wet natural sugar obtained in the spinning procedure.

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