ECONOMICS

Detailed explanation-1: -What is Setup Cost? Setup cost is those costs incurred to configure a machine for a production run. This cost is considered a fixed cost of the associated batch, so its cost is spread over the number of units produced.

Detailed explanation-2: -What is Batch Cost? Batch cost is the cluster of costs incurred when a group of products or services are produced, and which cannot be identified to specific products or services within the group. For cost accounting purposes, it may be considered necessary to assign the batch cost to individual units within a batch.

Detailed explanation-3: -noun [ C or U ] (also setup cost) us. the amount of money needed to start a business, service, etc.: There are no phone charges or set-up costs for the internet service if you register as a telephone customer.

Detailed explanation-4: -Batch costing is a type of specific order costing where articles are manufactured in predetermined lots known as batch. Here each batch is treated as a separate cost unit and cost are accumulated and ascertained for each batch. A batch consists of number of units which are processed simultaneously.

Detailed explanation-5: -The batch costing method is also known as lot costing because products are produced in lots of, for example, 500, 1, 000, or any other number. Batch costing is commonly used in the pharmaceutical industry.