ECONOMICS

Detailed explanation-1: -Basically, this method is similar to job costing. However, it is used where the job is big and spread over a long period of time. The work is done according to the specifications of the customer. The purpose of contract costing is to ascertain the cost incurred on each contract separately.

Detailed explanation-2: -Costs are broadly classified into four types: fixed cost, variable cost, direct cost, and indirect cost.

Detailed explanation-3: -The main costing methods available are process costing, job costing, direct costing, and throughput costing. Each of these methods applies to different production and decision environments.

Detailed explanation-4: -Continuous operation costing is used where the goods or services being costed are the result of continuous or repetitive operations or processes. Costs for a financial period are collected for the particular operation or process and divided by the number of units produced in the period to give an average cost per unit.

Detailed explanation-5: -Job order costing is a costing method which is used to determine the cost of manufacturing each product. This costing method is usually adopted when the manufacturer produces a variety of products which are different from one another and needs to calculate the cost for doing an individual job.