ECONOMICS

Detailed explanation-1: -It is the Cost Accounting used by the enterprises, like parts processing manufacturers or pharmaceutical makers, which generate the same product in a continuous fashion through a number of processes.

Detailed explanation-2: -Mass production of identical units such as beverages, pharmaceuticals, cereal, utilize process costing to determine the cost of each unit. Companies that produce identical units such as lumber, tile, brick manufacturers, cereal makers, or pharmaceutical companies utilize process costing.

Detailed explanation-3: -Activity Based Costing (ABC) brings a new dimension in pharmaceutical companies’ Cost of Goods Sold (COGS) estimation, where, individual raw material and procedural costs are grouped to provide accurate cost estimate per activity.

Detailed explanation-4: -Process costing is widely used in industries such as oil refining, food production, chemical processing, textiles, glass, cement and paint manufacture.

Detailed explanation-5: -Process costing is not applicable to heterogeneous products because they are unique products. Examples are yachts and hand-made products.