process costing

process costing

a system for determining the cost of products made in a PROCESS PRODUCTION plant like an oil refinery. The continuous nature of such a process and the uniformity of the products emerging from it make it difficult to identify specific units of output. The cost of any particular unit must, therefore, be taken as the average cost of manufacture over a period. Process costing is further complicated by the tendency to experience process wastage from chemical reaction or evaporation and the production of waste products which have to be allowed for in costing products emerging from the process. Furthermore, in making the main product, BY-PRODUCTS may arise from the production process, making it difficult to determine the respective cost of main and by-products since they result from common expenditures on raw materials and processing of these materials. See BYPRODUCT PRICING.
References in periodicals archive ?
The primary subject matter of this case is the preparation of a basic process costing report using the weighted-average method.
Production supervisors will count completed airplanes (those flown into the classroom), and then all students will assume the role of cost accountants to prepare a weighted- average process costing report.
Students have frequently expressed frustration and experienced difficulty understanding the complexities of process costing.
The remaining students will assist their peers as cost accountants in the preparation of the process costing report following the production period (just two minutes of class time).
The topic of process costing as often presented in textbooks is simplified and doesn't reflect industry practice.
To clarify how process costing is done in industry and how the use of standards can facilitate strategic cost management, we conducted interviews with managers at three consumer packaged goods manufacturers.
Process costing is defined as an accounting methodology that tracks the production of large quantities of identical units.
The discussion of process costing generally stops here.
26) This process of costing operations using proportional costs competes with the attempt to achieve better cost transparency in indirect areas with process costing (27) tools to also improve the planning and control of costs that were previously budgeted only as a lump sum.
An important innovation of process costing is thus its systematization and structuring of the activity network.
The second basic aspect of Process Costing is defining the cost categories.
Configuration Solutions' CS-Automotive and PPLM software solutions are designed to automate product and process costing and estimating, facilitate the management of engineering changes, and streamline program and project management for automotive parts suppliers.

Full browser ?