Process costing is a costing method utilized to determine the cost of products in industries characterized by continuous or mass production of homogeneous products. This method allocates costs to each process or department to ascertain the cost per unit, as products pass through various phases of production before completion. Features of Process Costing Homogeneous Products…
In contract costing, “contract profit” refers to the profit earned on a specific contract, particularly for long-term projects. It is calculated as the difference between the contract price and the total cost incurred in executing the contract. Accounting Treatment The recognition of profit on contracts depends on the stage of completion and the proximity of…
Material Accounting Material refers to any commodity or substance processed in a factory for conversion into a finished product. In cost accounting, material is classified as part of inventory. The terms “material” and “raw material” are often used interchangeably. Examples of Material Material Cost Material cost refers to the expense incurred for materials used as…