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Hello sir, I am really confused between Batch and Process Costing. I can not identify difference between their examples. Like if we say that car manufacturing is a batch costing. But it also goes through various processes to make a car like painting, assembling engine, welding etc. So why we do not consider it process costing. Kindly help me with this. I am unable to figure out difference between batch and process examples.
It is not really to do with the processes. It is do do with whether production results in a discrete batch or whether production is continuous.
In batch production there will be no work-in-progress, batches are discrete (ie have a start and end) and costs can be specifically traced to particular batches.
In process costing, production is continuous: there are no batches. To find costs of production ‘batches’ are artificially created by saying eg what costs went in in January and what did we produce in January. The complication can be that if you bring down the production and cost ‘guillotine’ on 31 January there is likely to be work-in-progress ie partially finished units that complicate the calculation of cost per unit.
Thank you sir, well explained unlike anywhere else ! Searched for this answer the whole web couldn’t find an answer better than yours.
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