Process Costing

Process costing is an accounting method used to determine the cost of manufacturing products in large quantities, typically in industries like chemicals, food, or textiles. Instead of tracking costs for individual items, process costing averages costs over all units produced during a specific period. Each manufacturing stage, or process, collects costs (like materials, labor, and overhead) and then these total costs are divided by the number of units produced. This approach helps companies understand their production costs and set prices while ensuring efficient resource management across continuous production processes.