ECONOMICS

Detailed explanation-1: -Process costing is a method of costing used mainly in manufacturing where units are continuously mass-produced through one or more processes. Examples of this include the manufacture of erasers, chemicals or processed food.

Detailed explanation-2: -Process costing is used when output is produced in a continuous process system, and it is difficult to separate individual units of output.

Detailed explanation-3: -As the products are manufactured in a continuous process, this is also known as continuous costing.

Detailed explanation-4: -The features of process costing employed in industries are: (1) Production is continuous, in a series of stages called processes. (2) Each process is deemed as a cost centre and costs are accumulated for each process separately along with output, finished and in progress. (3) Products and processes are standardised.

Detailed explanation-5: -The cost per unit is derived from the variable costs and fixed costs incurred by a production process, divided by the number of units produced.