In CS Online coaching classes, Method of costing is very interesting topic of cost and management accounting which is explained below:


  • Job Costing: when costs are ascertained to a system of costing for specific jobs or orders which are not comparable with each other is known as job costing. Industries, where this method of costing is generally applied are printing press, automobile garage, repair shop, ship-building, house building, engine and machine construction, etc.


  • Contract Costing: This method is applied where large scale contracts at different sites are carried out. A separate account is kept for each individual contract. The method is basically used by civil engineering contractors, constructional and mechanical engineering firms, builders, etc. In contracts, when it is agreed to pay an agreed sum or percentage to cover overheads and profit to the contractors, it will be termed as ‘cost plus costing’.


  • Batch Costing: This method is also a type of job costing. A batch of similar products is regarded as one job and the cost of this complete batch is ascertained.  It is used to determine the unit cost of the articles produced. The cost per unit is calculated by dividing the cost of the batch by the number of units produced in a particular batch. The manufacturers of biscuits, garments, spare parts and components mainly use this method.


  • Terminal Costing: This method is also a type of job costing. This method accentuates the essential nature of job costing, i.e. the cost can be accurately terminated at some point and related to a particular job.


  • Operation Costing: When a department is desired to ascertain the cost of carrying out of an operation is known as Operation costing. It is appropriate for industries where mass or repetitive production is carried out or where the goods have to be stocked in a semi-finished stage, to enable the execution of special orders, or for the convenient use in later operations. For example, welding.


  • Process Costing: This method is used in those industries where manufacture is done continuously, such as chemicals, oil, gas, paper, etc. In other words, if a product passes through different stages, each distinct and well defined, then in order to ascertain the cost at each stage or process, the process costing is used. Under this method, a separate process account is prepared and all costs incurred in that process are charged.


  • Single output costing: This method is used where a single item is produced and the final product is composed of homogeneous units. This is also known as unit costing. Example mines, quarries, cement work etc


  • Operating Costing: Operating costing is an advanced or refined form of process costing. The operating costing gives more emphasis on providing services rather than the cost of manufacturing an article. This method is used by only those organizations which render services such as transport, powerhouse, hospital, etc.


  • Composite Costing: When the output is comprised of many assembled parts or components, as with television, motor cars, electronic gadgets, costs have to be ascertained for each component, as well as with the finished product. Such costing may involve different methods of costing for different components. Therefore, this type of costing is known as composite or multiple costing.


  • Departmental Costing: Ascertainment of cost of the department by department, the method is called Departmental Costing. Usually, for ascertaining the cost of various goods or services produced by the department, the total costs will have to be analyzed, say, by the use of job costing or unit costing.

A complete explanation of the method of costing with examples is available for CS PREPARATION in CS online cs coaching classes.

As Takshila learning is serving CS Executive online classes for CS COURSE through online portal www.takshilalearning.com.   CS PREPARATION classes comprises of CS ONLINE COACHING CLASSES , video lectures, MCQs series and  proper notes for preparation.

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August 22, 2019


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