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What is Batch Costing, what is the accounting procedure for Batch Costing?

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What is Batch Costing, what is the accounting procedure for Batch Costing?
posted Jul 7, 2017 by Raghav Choudhary

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I.C.M.A. London has defined Batch Costing as that form of specific order costing which applies where similar articles are manufactured in batches either for sale or use within the Company. In most of the cases the costing is similar to job costing. This is used when production consists of limited repetition work and a definite number of articles are manufactured in one batch.

In shoe industry, bakeries, toys, Batch Costing is used. In batch costing the unit is a batch. I.C.M.A., London, has defined a batch as a “Cost unit which consists of a group of similar articles which maintains its identity throughout one or more stages of production. Each batch is given a production order number”. The cost of each batch is determined separately by charging with its own costs.

Materials issued are allocated directly to the batch. Wages are also charged to the batch. For the calculation of wages, Time tickets are used which show the amount of time devoted on each batch order number by direct workers. Overheads are absorbed according to the suitable basis of absorption. Per unit cost is determined by dividing the total cost of the batch by the total batch quantity.

answer Jul 8, 2017 by Ramesh Gowda
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