Test Your Knowledge on Costing Methods and Techniques

Methods and Techniques of Costing

• Two main methods used to determine costs: Job Cost Method and Process Cost Method.
• Job Costing is used for tracing specific costs to individual jobs or orders that are not comparable with each other, commonly used in printing press, automobile garage, repair shops.
• Contract Costing is similar to Job Costing, but separate contract accounts are maintained when large scale contracts are carried out at different sites like building construction, ship builders.
• Cost Plus Costing is used when an agreed sum or percentage besides ‘cost’ to cover overheads and profit is paid to the contractor, generally used where the government is the contractee.
• Batch Costing considers a batch of similar products as one job, commonly used in pharmaceutical industries, brick manufacturing companies.
• Process Costing is employed to ascertain the cost of production at each stage if a product passes through different distinct and well-defined stages, suitable for extractive industries like chemical manufacture, paints, foods, explosives, soap making, etc.
• Operation Costing is the same as Process Costing, but the cost unit is an operation instead of a process, used for large undertakings involving a number of operations.
• Unit Costing computes the cost of a single product produced by a continuous manufacturing process in addition to the amount of each element of cost, suitable for industries like flour mills, paper mills, cement manufacturing, etc.
• Operating Costing is used to ascertain the cost of services rendered, like transport companies, electricity companies, or railway companies.
• Departmental Costing aims to ascertain the cost of output of each department of the company separately.
• Multiple Costing is the application of more than one method of costing for the same product, applicable where a product comprises of many assembled parts.
• Marginal Costing is an accounting system in which variable costs are charged to cost units, and the fixed costs of the period are written-off in full against the aggregate contribution, used for managerial decision making and controlling costs.

Methods and Techniques of Costing

• Two main methods used to determine costs: Job Cost Method and Process Cost Method.
• Job Costing is used for tracing specific costs to individual jobs or orders that are not comparable with each other, commonly used in printing press, automobile garage, repair shops.
• Contract Costing is similar to Job Costing, but separate contract accounts are maintained when large scale contracts are carried out at different sites like building construction, ship builders.
• Cost Plus Costing is used when an agreed sum or percentage besides ‘cost’ to cover overheads and profit is paid to the contractor, generally used where the government is the contractee.
• Batch Costing considers a batch of similar products as one job, commonly used in pharmaceutical industries, brick manufacturing companies.
• Process Costing is employed to ascertain the cost of production at each stage if a product passes through different distinct and well-defined stages, suitable for extractive industries like chemical manufacture, paints, foods, explosives, soap making, etc.
• Operation Costing is the same as Process Costing, but the cost unit is an operation instead of a process, used for large undertakings involving a number of operations.
• Unit Costing computes the cost of a single product produced by a continuous manufacturing process in addition to the amount of each element of cost, suitable for industries like flour mills, paper mills, cement manufacturing, etc.
• Operating Costing is used to ascertain the cost of services rendered, like transport companies, electricity companies, or railway companies.
• Departmental Costing aims to ascertain the cost of output of each department of the company separately.
• Multiple Costing is the application of more than one method of costing for the same product, applicable where a product comprises of many assembled parts.
• Marginal Costing is an accounting system in which variable costs are charged to cost units, and the fixed costs of the period are written-off in full against the aggregate contribution, used for managerial decision making and controlling costs.

Are you familiar with the different methods and techniques of costing? Test your knowledge with this quiz! From Job Costing to Marginal Costing, this quiz covers the various methods used to determine costs in different industries and situations. Challenge yourself and see how well you know the concepts of costing. Keywords: costing, methods, job costing, process costing, unit costing, batch costing, marginal costing, departmental costing, operating costing, contract costing, multiple costing, cost plus costing.