ECONOMICS

Detailed explanation-1: -Batch costing focuses on a group of identical products produced for the company’s own stock, and job costing is concerned with determining the cost of completing works in accordance with customer criteria.

Detailed explanation-2: -Batch Costing – Nature and Uses The term batch refers to the ‘lot’ in which the articles are to be manufactured. Whenever a particular product is required, one unit of such product is not produced but a lot of ‘say’ 500 or 1, 000 units of such product is produced. It is therefore also known as “Lot Costing”.

Detailed explanation-3: -The formula for batch costing is as follows: Batch Costing = (Total Cost of Goods Produced / Number of Units Produced) x Number of Units in Batch. For example, if the total cost of goods produced is ₹100, 000 and the number of units produced is 10, 000, then the batch cost would be ₹10 per unit.

Detailed explanation-4: -There are two types of costs involved in Batch Costing: If the batch size is increased, set up cost per unit will come down and the carrying cost will increase. If the batch size is reduced, set up cost per unit will increase and the carrying cost will come down.

Detailed explanation-5: -Job costing refers to a specific costing method, used when the production/work is carried out according to the requirements of customers. Batch costing, is a form of job costing, that is applied when the articles are produced in batches, i.e. a group of like units are produced. Production. As per customer specification.