process costing.pptx for MBA and PGDM Students

This PPT is Helpful for MBA/PGDM Students.

1. PROCESS COSTING PRESENTED BY:- YAGNESWAR MAHAPATRA LOKNATH PRUSTY SAI CHIDANANDA SOUMYA SAHOO

2. content What is process costing? Overview of process costing system Purpose of process costing Term in process costing Allocating Overhead Costs Variances in Process Costing Format of process costing Conclusion

3. Introduction to Process Costing Process costing is an essential accounting method used to determine the cost of producing goods in a continuous or mass production environment. It provides a systematic approach to allocating and tracking the costs associated with each step of the production process.

4. Overview of process costing system:

5. Allocating Overhead Costs Direct Costs These are costs directly attributable to the production of a specific good, such as raw materials and direct labor. Indirect Costs Overhead costs that cannot be directly traced to a particular product, such as utilities, rent, and supervision, must be allocated using predetermined rates. Allocation Bases Common allocation bases include direct labor hours, machine hours, or units produced to distribute overhead costs across products.

6. Variances in Process Costing 1 Material Variances Differences between actual and standard material costs, including usage and price variances. 2 Labor Variances Differences between actual and standard labor costs, including efficiency and rate variances. 3 Overhead Variances Differences between actual and budgeted overhead costs, including volume, efficiency, and spending variances.

7. In conclusion, process costing is an essential accounting method for industries engaged in continuous, mass production of homogeneous products. It allows for the systematic allocation of production costs to units of output, ensuring accurate cost measurement and efficient resource management.