Name : Nadiatul Qalbi Amalia Rizqi

Student ID : 041911333077

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. In process costing it is the process that is costed (unlike job costing
where each job is costed separately). The method used is to take the total cost
of the process and average it over the units of production.

Process costing is used in situations where homogeneous products or services

are produced on a continuous basis. Costs flow through the manufacturing
accounts in basically the same way in both job-order and process costing
systems. A process costing system differs from a job-order system primarily in
that costs are accumulated by department (rather than by job) and the
department production report replaces the job cost sheet.

To compute unit costs in a department, the department's output in terms

of equivalent units must be determined. In the weighted-average method, the
equivalent units for a period are the sum of the units transferred out of the
department during the period and the equivalent units in ending work in
process inventory at the end of the period.

The activity in a department is summarized on a production report. There are

three separate (though highly interrelated) parts to a production report. The
first part is a quantity schedule, which includes a computation of equivalent
units and shows the flow of units through a department during a period. The
second part consists of a computation of costs per equivalent unit, with unit
costs being provided individually for materials, labour, and overhead as well
as in total for the period. The third part consists of a cost reconciliation, which
summarizes all cost flows through a department for a period.