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Detailed explanation-1: -Process costing is used when a large number of identical products are manufactured. This costing method is best suited when there are standardized products in large quantities in the production process. An example of where the method of process costing can be used is an oil refinery.
Detailed explanation-2: -A process costing system is a method typically used within certain sectors of the manufacturing industry to determine the total production cost for each unit of product. It accumulates cost from each process or department and allocates them to the individual products produced.
Detailed explanation-3: -Method # 5 Unit Costing: This method is also known as single or output costing. It is suitable to industries where production is continuous and units are identical. The objective of this method is to ascertain the total cost as well as the cost per unit.
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.
Detailed explanation-5: -Companies that use process costing produce a single product, either on a continuous basis or for long periods. All the products that the company produces under process costing are the same.