Average Cost (also known as Weighted-Average Cost) is a method of determining the cost per unit by dividing total costs by the total output. This method includes recalculating the unit value for raw materials or finished goods after each new consignment.
A by-product is a secondary product derived from a manufacturing process or chemical reaction, often with some economic value.
Common costs refer to the expenses shared by multiple products, processes, or departments before any differentiation occurs. These can often be fixed costs and are important in allocations to determine accurate product costing.
A system of costing applied to industries where production methods are continuous, such as in electricity generation and bottling. This system uses average costing to determine unit cost by dividing the total production cost by the number of items produced.
Cost Assignment or Cost Attribution refers to the procedures by which direct or indirect costs are charged to or made the responsibility of particular cost centers, and ultimately charged to the products manufactured or services provided by the organization.
Techniques and procedures in cost accounting and management accounting to obtain the costs of services, products, processes, and cost centers for decision making, planning, and control.
A method of valuing raw materials or finished goods by using the earliest unit value for pricing issued items until all stock received at that price has been used up. This method is significant in inventory management and accounting, ensuring a logical and often tax-efficient way to evaluate inventory costs.
In process costing, the costs incurred prior to the separation point after which the joint products are treated individually. Joint costs are therefore common to the joint products and need to be apportioned to determine individual product costs.
The primary product that results from a manufacturing or production process, holding the greatest economic significance compared to any by-products or joint products.
Process costing is a method of costing used primarily in manufacturing where goods or services result from a sequence of continuous or repetitive operations.
A costing system applied to production carried out by a series of chemical or operational stages or processes. Characterized by the accumulation of costs for the whole production process and computation of average unit costs at each stage.
Process costing is a method of cost accounting used where production is continuous, and the cost per unit is derived by spreading production costs equally across all units produced in a specific time period.
The costs of production when charged to the cost units and expressed as costs of individual products. Product costs may include both direct costs and indirect costs (overhead); many different costing methods, such as absorption costing, activity-based costing, and process costing, are used in computing product costs.
Sales values represent the prices charged for items when they are sold. Additionally, in accounting, they serve as a method of apportioning joint costs between joint products in process costing models.
In process costing, the separation point, also known as the split-off point, is where by-products or joint products emerge and begin their independent processing paths.
Waste (also referred to as spoilage) is the amount of material lost as part of a production process. Acceptable levels of waste, known as normal loss, are part of the cost of production and are allowed for in the product costs. Any process or activity that does not add value is also considered waste.
