Eventually, costs have to be allocated to individual units of product.
CIMA defines process costing as "The costing method applicable where goods or services result from a sequence of continuous or repetitive operations or processes.
A process can be referred to as the sub-unit of an organization specifically defined for cost collection purpose.
Costing is generally used in such industries such as petroleum, coal mining, chemicals, textiles, paper, plastic, glass, food, banks, courier, cement, and soap.
As follows: A) Raw materials that cost $38,200 are withdrawn from the storeroom for use in the Mixing Department.
E) Units with a carrying cost of $143,800 finish processing in the Drying Department, the final step in the production process, and are transferred to the finished goods warehouse.
F) Finished goods with a carrying cost of $138,500 Required: Prepare journal entries to record items A) through F).
When production is repetitive nature and consists of a definite number of articles, batch is used.