In the contemporary period, process costing is one successfully adopted accounting methodology in organizations. Organizations use process costing for effective cost calculation, especially at times when other costing models (job costing or activity based costing) are futile and not producing desired outcomes. Process costing is applied when activities like cost accumulation, cost assignment and cost assessment are to be performed and conducted. When both cost of fixed and variable natures are to be calculated then process costing comes into organizational application.
Importance of Process Costing
When an organization involves the multi-level production process and manufactures products in departmental sequence, then cost management is really a critical task. Process costing is a methodology than enables such organizations to calculate costs in the critical times. It is one methodology that can effectively be applied in manufacturing firms and organizations. Organizations where information flow is departmental can successfully adapt the strategic approach of process costing. This elaborates the comprehensive application of process costing in processing organizations.
Journal Article 1: Process-Based Costing: The Best of Activity-Based Costing
Aim: Process costing is considered as a cost allocation process. It is known to be as a methodology that assigns cost to different process patterns with respect to assigning cost to process a sequence. The aim of this study is to determine that how process costing is effective in cost allocation procedure. How process costing applies in the activity of assigning costs to sub-sections of the process is answered in this study. ...