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Application of Process Costing

Process costing is applicable in certain industries. Those industries are:

  1. Biscuit works
  2. Paper mills
  3. Sugar mills
  4. Chemical works
  5. Oil refining
  6. Distillation process
  7. Soap making
  8. Meat Products Factory
  9. Varnishing industry
  10. Dairy factory
  11. Paint and Ink making company
  12. Spinning
  13. Coke Works
  14. Industries related to food products
  15. Gas manufacturing companies
  16. Textile industry
  17. Weaving company

Industries use the method of process costing in single merchandise production and also in the production of various bulk materials and goods.

Features of Process Costing

  1. It explains the core of process cost.
  2. The flow in production takes place without any interruption. It is due to the process chain with whose help;the outcome is the final product.
  3. Any unusual profit or loss should be attended appropriately using the process of process costing.
  4. There are no separate divisions in the production of product or by-product. Different manufactured goods with its secondary product are generated at more than one phases of mass production.
  5. With the help of this method, production houses can easily calculate the production of functional units. They can also estimate those inputs which did not get turned into finished commodities.
  6. During more than one process, every unit and completed products are invariable and similar after production.
  7. A process can use a different process output as raw material for their production.