1. JOB costing & PROCESS Costing
Presented By:- Nikita Khemani
Roshni Gupta
Seema Pandey
Vinod Rajput

2. PROCESS CYCLE

3. MEANING OF PROCESS COSTING
Meaning : process costing is a method of costing applied to industries
where the material has to pass through two or more processes
for being converted into a finish product. Each process is treated
as a cost center. The cost of each process is accumulated and
per unit cost is determined for this purpose the following formula
is applied :
Cost per unit of each process= Cost of Output in the process
Normal no. of units in the process

4. JOB costing
Job costing is the method of costing used to determine the cost of
Non-standard carried out according to customer’s specification .
ADVANTAGE OF JOB COSTING
i. Detailed Analysis of cost
ii. Cost control
iii. Advantage of Budgetary Control
iv. Help in Production Planning
v. Useful in cost Plus

5. CHARACTERISTICS OF PROCESS COSTING
1. The production is continuous and the end product is the result of a
sequence of processes. Each plant is divided into separate process
center processes a single product.
2. To complete the production work the sequence of process is clearly
defined and activities of the process are also clearly identified.
3. Production is done in large scale.
4. It is also possible to obtain joint product or by-product from the
of raw material or production technology.

6. DISTINCTION BETWEEN JOB COSTING & PROCESS COSTING
Job costing Process costing
1. Unit is one and specific and 1. Production is divided into
work is done by specific several units and the unit s are
order. uniform . Production is
continuous .
2. One job is not related to or 2. The succeeding process is
dependent on each other. dependent on the preceding
one.
3. The cost of a job is not 3. The cost of a process is
transferred to the others. transferred to the next process.

7. Q: A product passes through three process , process A, process B,
Process C, to completion. The production of the commodity was 1,000
tone.
The cost were as follows :
process A process B process C
Material 3000 1500 1500
Labour 1500 3000 5250
Manufacturing Expenses 1500 4500 5250
Assume that there was no work-in progress either at the beginning or at
the end . Show the process cost for each process and the total cost of the
finished product.

8. Solution
Process A account
particular Cost Total particular Cost Total
per cost per cost
tonne tonne
To Material 3.00 3000 By process B A/c 6.00 6000
(output
To Labour 1.50 1500 transferred)
To Manufacturing 1.50 1500
Expenses
6.00 6000 6.00 6000

9. process B account
particular Cost Total particular Cost Total
per cost per cost
tonne tonne
To process A A/c 6.00 6000 By process C A/c 15.00 15000
(output
To Material 1.50 1500 transferred)
To Labour 3.50 3000
To Manufacturing 4.50 4500
Expenses
15.00 15000 15.00 15000

10. process C Account
particular Cost Total particular Cost Total
per cost per cost
tonne tonne
To process B A/c 15.00 15000 By Finished Stock 27.00 27000
A/c
To Material 1.50 1500 (output
transferred)
To Labour 5.25 5250
To Manufacturing 5.25 5250
Expenses
27.00 27000 27.00 27000

11. Q: The following three jobs were completed in the week ending 7th oct.,
2010.compute the total cost by preparing a statement of cost with
the information given below :
job No.1 job No.2 job No.3
Rs. Rs. Rs.
Direct Material 2000 2400 6400
Direct Labour 1600 1800 2400
Direct Expenses 400 600 600
Charges work over head @50% on direct Labour and office over head @10%
On work cost .What shall be the job price of 10% profit is desired on the
Supply price.

12. Solution:
Statement of cost
For the week ending 7.10.2010
Particular Job no.1 Job no.2 Job
no.3
Direct Material 2000 2400 6400
Direct Labour 1600 1800 2400
Direct Expenses 400 600 600
Work overhead prime cost 4000 4800 9400
(50% on Direct Labour) 800 900 1200
Office over head work cost 4800 5700 10600
(10% on works cost) 480 570 1060
Profit 10% on supply price or total cost 5280 6270 11660
1/9 on total cost 587 697 1296
job price 5867 6967 12956

13. Reasons for use
Companies need to allocate total product costs to units of product
for the following reasons:
•A company may manufacture thousands or millions of units of
product in a given period of time.
•Products are manufactured in large quantities, but products may
be sold in small quantities, sometimes one at a time (automobiles,
loaves of bread), a dozen or two at a time (eggs, cookies), etc.
•Product costs must be transferred from Finished Goods to Cost
of Goods Sold as sales are made. This requires a correct and
accurate accounting of product costs per unit, to have a proper
matching of product costs against related sales revenue.