ECONOMICS

Detailed explanation-1: -A process costing system is used to accumulate costs by process for companies that product large quantities of similar products. The main difference between a job order and a process costing system is that a process costing system does not use the Finished Goods Inventory account.

Detailed explanation-2: -Process costing is generally used by manufacturers that produce a large volume of identical items, such as companies involved in oil refining, food production, chemical processing, textiles, glass, cement and paint.

Detailed explanation-3: -Under variable costing, the finished goods inventory includes all direct costs and variable overhead costs that have been paid up to the point where the goods are finished. It does not include any period expenses or fixed overhead costs.

Detailed explanation-4: -Process costing is a costing method or an operational type of costing in which a manufacturer tracks the cost of production of a sequence of continuous or repetitive processes required to produce a product.