Question

process costinh

what is the meaning of process costing and why is it important to managerial accounting

Answer 1

process costing has bee f process of operations, the Where standarised goods are produs • What is meaning of process costing ? costing th Kohler as dee a has been defined by method of costs are charged ato of cost accounting whereby cost aceounting w SCOALSSes Of Opaljons and sellain ovestages over Poloduced." 1. When production of similar wirts is coored on can Continuously though a series of process of beerations, appropriate e field field or or applications applications of of the method application the of the method of process costing is obtained. Por is therefore, applied in industries where continuous or mas. production of standard output is the rule. I.C.M. A to defines Process - Costing costing as " as that that form form o of operation costing, used goods are produced." • It's important in managerial costing : process costing is an easie system to use when costing homogenous products compared to other cost allocation methods. Managment Accountants tave the total numbers of goods leaving the process and divide the total number of goods leaving the process and divide the tatal process Cost by this number. This creates a simple average cost for each item produced. O process costing is an important process that many companies engage into keep track of where their money is being spent in the production and distribution process. is very important that a company chooses the appropriate type of costing system for their poroduct type and industru The following importance of process costing are ; 4 1 process costing involves less expense and less effort on accounting, ohling to its simple nature. 3) It gives detailes process, operation or department, budgeted and actual, enabling the managment to employ effective contoral on performance. 3) Ovoheads may allocate to depertments or process ao on definite bases all of allocations 4 pouce quotation is very easy in Phoeess costing. ts or process arenrately