6. Describe various types of costing. Answer:- Costing is the process of determining the cost of a product or service. It is an important aspect of any business as it helps in determining the profitability of a product or service. There are various types of costing methods that are used by businesses to determine the cost of their products or services. In this article, we will discuss the various types of costing methods in detail. The main types of costing are as follows: 5821.Historical Costing. "The ascertainment of costs after they have been incurred." Historical costs are,therefore, ‘post- mortem costs as under this method all the expenses incurred on the production are first incurred and then the costs areascertained. °822.Standard Costing. "The preparation and use of standard costs, their comparison with actual costs and the analysis of variance to their causes and point of incidence." __1.C.M.A Here the standards are first set and then they are compared with actual performance. The difference between the standard and the actual is known as the variance. The variances are analysed to find out their causes and also the points or locations at which they occur. Standard costs are predetermined costs in conformity with the most efficient operation and use of the resources within the concern. Standard costing is widely used as tool of cost control in industries.£823.Marginal Costing. "The ascertainment of marginal costs and of the effect on profit of changes in volume or type of output by differentiating between fixed costs and variable costs." __1.C.M.A The fixed costs are those which do not change but remain the same, with the increase or decrease in the quantum of production. The variable costs are those which do change proportionately with the change in quantum of production. The marginal costing takes into account only the variable costs find out ‘marginal costs’. The difference between Sales and Marginal costs is known as ‘Contribution’ and contribution is an aggregate of Fixed costs and Profit/Loss. Fixed costs attributable to the relevant period are deducted from the contributionto find out the profits.Marginal costing is a technique to ascertain the effect on profit by the change in the volume of output or by the change in the type of output. °624. Direct Costing. "The practice of charging all direct costs to operations, processes or products, leaving all the indirect costs to be written off against profits in the period u which they arise." _1.C.M.A. Direct costs or the variable costs such as direct material, direct labour and variable manufactring expenses are examples of costs charged to the product. This technique is similar to ‘Marginal Costing’ except that some fixed costs could be considered to be the direct costs in appropriate circumstances.825.Absorption Costing. "The practice of charging all costs, both variable and fixed, to operation, processes or products." This is the traditional technique as opposed to Marginal or Direct costing techniques. Here both the fixed and variable costs are charged in the same manner. £826.Uniform Costing."The use by several undertakings of the same costing principles and/or practices. When several similar undertakings Join together to adopt a common approach to costing problems. They adopt the same method of costing and the same set of books in order to compare the performance of one with the other and thus, to derive the benefit one's performances by the other.Some other types of costing are as follow:- $821. Job Costing- Job costing method is a system of costing in which costs are ascertained in terms of specific jobs or orders which are not comparable with each other and non-repetitive in nature. This method is applied where work is undertaken on the request of customer's special requirements and each order is comparatively of shorter time period and work is usually carried out within the factory premises or workshop and moves through activities, processes and operations as a continuously identifiable unit. However, sometimes, the job may be performed outside the factory premises depending upon the nature of job, e.g., plumbering job, sanitary job, fitting job, etc. Job costing methods are applicable where the unit of manufacture is one and complete in itself. They include printers,job foundries, tool manufacturers, contractors, ete. In job costing, the quantity to produce and its requirement is first estimated and thereafter the expenses are determined as per the nature, size or specification of job. 822. Contract Costing - Contract costing is a costing method which applies where work is executed under customer's specific requirements and each order is of long duration which may cover or go into several accounting year. This method is applied in undertakings erecting buildings or carrying out constructional works, e.g., House building, Ship building, Civil Engineering contracts. Here the cost unit is one and complete in itself. The cost unit is a contract which may continue for over more than a year. It is also known as the Terminal Costing, since the works are to be completed within a specified period as per terms of contract or agreementexecuted by the contractor and the contractee for a specific contract price. 3. Batch Costing - In this method, a batch of similar or identical products is treated as a job. Here, the unit of cost is a batch or a group of products. Costs are collected and analysed according to batch numbers and the costs are ascertained batchwise. This method is applied in pharmaceutical industries where medicines or injections are manufactured batchwise or in general engineering factories producing components in convenient batches. £824. Process Costing- Process costing method is applicable to those industries which manufacture number of units of output requirmg processing. Here, an article or product has to undergo two or more processes for reaching the stage of finished goods and the finished goods ofthe preceding process is treated as a raw material for the succeeding process till completion. The order or sequence of processes is specific and pre-determined and the units manufactured are uniform and standardised. The cost unit is per article, per kg, per ton or similar other units and this method is applicable to chemical industries producing, for example, soap, vegetable ghee, edible or non-edible oils, paints, varnishes, ete, or to refineries or to gas and electricity generating concerns, 825. Single or Output Costing-This method is used where the production is uniform and consists of only a single product. The cost is ascertained per unit of output. The units are identical to each other and are the standard ones. Where the products manufactured are of different grades, the costs of products are ascertained gradewise and the cost per unit is determined by dividing the total cost ofeach grade by the number of articles of that grade, This method is applied to industries like mining, quarries, flour mills, steel works, ete., where the cost per unit is required to be ascertained. --In conclusion, there are various types of costing methods that are used by businesses to determine the cost of their products or services. The choice of costing method depends on the nature of the business and the product or service being produced. It is important for businesses to choose the right costing method to ensure that they are able to determine the true cost of their products or services and make informed decisions about pricing and profitability.