Chapter 11: Process Costing – Introduction

Process costing applies where goods are produced in a series of processes and every unit is assumed to have involved the same amount of work. The costs of a period are charged to the process, and the unit cost is found by dividing the process costs by the quantity of units produced.

During February the following costs were incurred in a process: materials $20,000, labour $10,000, overheads $8,000.

2,000 units were produced.