What is process costing?

Definition of Process Costing

Process costing is a term used in cost accounting to describe one method for collecting and
assigning manufacturing costs to the units produced. A processing cost system is used when
nearly identical units are mass produced. (Job costing or job order costing is a system used to
collect and assign manufacturing costs to units that vary from one another.)
Example of Process Costing
Let's assume that a company manufactures large quantities of an identical product. The product
requires several processing operations, each of which occurs in a separate department. In the first
department, the following processing costs were incurred during the month of June:

 Direct materials of $150,000

 Conversion costs of $225,000
If the equivalent of 100,000 units were processed in June, the per unit costs will be $1.50 for
direct materials and $2.25 for conversion costs. These costs will then be transferred to second
department where its processing costs will be added.

What is process costing?

Definition of Process Costing
Process costing is a term used in cost accounting to describe one method for collecting and
assigning manufacturing costs to the units produced. A processing cost system is used when
nearly identical units are mass produced. (Job costing or job order costing is a system used to
collect and assign manufacturing costs to units that vary from one another.)
Example of Process Costing
Let's assume that a company manufactures large quantities of an identical product. The product
requires several processing operations, each of which occurs in a separate department. In the first
department, the following processing costs were incurred during the month of June:

 Direct materials of $150,000

 Conversion costs of $225,000
If the equivalent of 100,000 units were processed in June, the per unit costs will be $1.50 for
direct materials and $2.25 for conversion costs. These costs will then be transferred to second
department where its processing costs will be added.

What is process costing?

Definition of Process Costing
Process costing is a term used in cost accounting to describe one method for collecting and
assigning manufacturing costs to the units produced. A processing cost system is used when
nearly identical units are mass produced. (Job costing or job order costing is a system used to
collect and assign manufacturing costs to units that vary from one another.)
Example of Process Costing
Let's assume that a company manufactures large quantities of an identical product. The product
requires several processing operations, each of which occurs in a separate department. In the first
department, the following processing costs were incurred during the month of June:

 Direct materials of $150,000

 Conversion costs of $225,000
If the equivalent of 100,000 units were processed in June, the per unit costs will be $1.50 for
direct materials and $2.25 for conversion costs. These costs will then be transferred to second
department where its processing costs will be added.

What is process costing?

Definition of Process Costing
Process costing is a term used in cost accounting to describe one method for collecting and
assigning manufacturing costs to the units produced. A processing cost system is used when
nearly identical units are mass produced. (Job costing or job order costing is a system used to
collect and assign manufacturing costs to units that vary from one another.)
Example of Process Costing
Let's assume that a company manufactures large quantities of an identical product. The product
requires several processing operations, each of which occurs in a separate department. In the first
department, the following processing costs were incurred during the month of June:

 Direct materials of $150,000

 Conversion costs of $225,000
If the equivalent of 100,000 units were processed in June, the per unit costs will be $1.50 for
direct materials and $2.25 for conversion costs. These costs will then be transferred to second
department where its processing costs will be added.

What is process costing?

Definition of Process Costing
Process costing is a term used in cost accounting to describe one method for collecting and
assigning manufacturing costs to the units produced. A processing cost system is used when
nearly identical units are mass produced. (Job costing or job order costing is a system used to
collect and assign manufacturing costs to units that vary from one another.)
Example of Process Costing
Let's assume that a company manufactures large quantities of an identical product. The product
requires several processing operations, each of which occurs in a separate department. In the first
department, the following processing costs were incurred during the month of June:

 Direct materials of $150,000

 Conversion costs of $225,000
If the equivalent of 100,000 units were processed in June, the per unit costs will be $1.50 for
direct materials and $2.25 for conversion costs. These costs will then be transferred to second
department where its processing costs will be added.

What is process costing?

Definition of Process Costing
Process costing is a term used in cost accounting to describe one method for collecting and
assigning manufacturing costs to the units produced. A processing cost system is used when
nearly identical units are mass produced. (Job costing or job order costing is a system used to
collect and assign manufacturing costs to units that vary from one another.)
Example of Process Costing
Let's assume that a company manufactures large quantities of an identical product. The product
requires several processing operations, each of which occurs in a separate department. In the first
department, the following processing costs were incurred during the month of June:

 Direct materials of $150,000

 Conversion costs of $225,000
If the equivalent of 100,000 units were processed in June, the per unit costs will be $1.50 for
direct materials and $2.25 for conversion costs. These costs will then be transferred to second
department where its processing costs will be added.

What is process costing?

Definition of Process Costing
Process costing is a term used in cost accounting to describe one method for collecting and
assigning manufacturing costs to the units produced. A processing cost system is used when
nearly identical units are mass produced. (Job costing or job order costing is a system used to
collect and assign manufacturing costs to units that vary from one another.)
Example of Process Costing
Let's assume that a company manufactures large quantities of an identical product. The product
requires several processing operations, each of which occurs in a separate department. In the first
department, the following processing costs were incurred during the month of June:
 Direct materials of $150,000
 Conversion costs of $225,000
If the equivalent of 100,000 units were processed in June, the per unit costs will be $1.50 for
direct materials and $2.25 for conversion costs. These costs will then be transferred to second
department where its processing costs will be added.