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hybrid Costing process costing contract costing h

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MitikaAnjel

This document discusses different types of costing methods: job costing, process costing, hybrid costing, and contract costing. Job costing tracks costs for individual jobs or orders. Process costing is used for continuous production where materials pass through multiple processes. Hybrid costing combines elements of job and process costing. Contract costing determines costs for larger jobs or assignments by tracking costs to completion over time according to certification milestones.

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JOB COSTING PROCESS COSTING HYBRID COSTING CONTRACT COSTING
Job Costing • CIMA defines job costing as “ that from of specific order costing which applies where work is undertaken to customer’s special requirements and each order is of comparatively Of short duration.”
Job Costing • Advantages: 1. Information is readily available and help in control the efficiency. 2. Production planning and estimating the cost of similar jobs 3. Spoilage and defective works can be easily idenitfied
Job Costing • Disadvantages: 1. Expensive due to more clerical work. 2. Clerical processes chances of error. 3. In inflation comparison of job sheet becomes meaningless.
Job Costing • General Application: engineering jobs, printing jobs, automobile services, fabrication job etc. • Features: 1. specific job 2. customer requirement 3. unit of cost is job itself
Process Costing • It is a method of costing used in industries where the raw material passes through two or more processes before converted in to final product. • It is defined as “ a method of cost accounting whereby cost are charged to processes or operations and averaged over unit produced. ”
Process Costing • Distinct features: 1. Divided in to number of process 2. Continuous manufacturing 3. Output of one input of another 4. Similar units no distinguishable 5. Not possible to trace which lot of output is form which lot of input materials 6. Cost centre process itself cost unit output of process.
Process Costing • Advantages: 1. Simpler and less expensive. 2. Managerial control is possible. 3. Allocation of expenses to process can be easily made and cost become accurate. 4. Process cost can be determine periodically at short intervals
Process Costing • Disadvantages : 1.Average costs are not always accurate and wide scope of errors. 2. Computing unit costs or continuous process, work- in-progress is required to be ascertained. • General applications: steel, chemicals, rubber, vegetable oil, paints, varnish etc.
Hybrid Costing a hybrid costing system is a cost accounting system that includes features of both a job costing and process costing system. a hybrid costing system is useful when a production facility handles groups of products in batches and charges the cost of materials to those batches.
Contract Costing • Contract : contract refers to a bigger job/assignment/work order. • Contract costing: contract or terminal costing involves ascertainment of cost of contract.
Contract Costing • General Application: This method is generally found in activities like Civil Construction, ship building, interior decoration etc. • Parties involved: contractor: one who undertakes and execute work under a contract. Contractee: one for whom work is undertaken.
Contract Costing • What are rules for recognition of profit on incomplete contracts? 1. initial stage 2. work performed but not substantial certified 3. substantially completed certified 4.almost complete 5. fully complete

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hybrid Costing process costing contract costing h

  • 1. JOB COSTING PROCESS COSTING HYBRID COSTING CONTRACT COSTING
  • 2. Job Costing • CIMA defines job costing as “ that from of specific order costing which applies where work is undertaken to customer’s special requirements and each order is of comparatively Of short duration.”
  • 3. Job Costing • Advantages: 1. Information is readily available and help in control the efficiency. 2. Production planning and estimating the cost of similar jobs 3. Spoilage and defective works can be easily idenitfied
  • 4. Job Costing • Disadvantages: 1. Expensive due to more clerical work. 2. Clerical processes chances of error. 3. In inflation comparison of job sheet becomes meaningless.
  • 5. Job Costing • General Application: engineering jobs, printing jobs, automobile services, fabrication job etc. • Features: 1. specific job 2. customer requirement 3. unit of cost is job itself
  • 6. Process Costing • It is a method of costing used in industries where the raw material passes through two or more processes before converted in to final product. • It is defined as “ a method of cost accounting whereby cost are charged to processes or operations and averaged over unit produced. ”
  • 7. Process Costing • Distinct features: 1. Divided in to number of process 2. Continuous manufacturing 3. Output of one input of another 4. Similar units no distinguishable 5. Not possible to trace which lot of output is form which lot of input materials 6. Cost centre process itself cost unit output of process.
  • 8. Process Costing • Advantages: 1. Simpler and less expensive. 2. Managerial control is possible. 3. Allocation of expenses to process can be easily made and cost become accurate. 4. Process cost can be determine periodically at short intervals
  • 9. Process Costing • Disadvantages : 1.Average costs are not always accurate and wide scope of errors. 2. Computing unit costs or continuous process, work- in-progress is required to be ascertained. • General applications: steel, chemicals, rubber, vegetable oil, paints, varnish etc.
  • 10. Hybrid Costing a hybrid costing system is a cost accounting system that includes features of both a job costing and process costing system. a hybrid costing system is useful when a production facility handles groups of products in batches and charges the cost of materials to those batches.
  • 11. Contract Costing • Contract : contract refers to a bigger job/assignment/work order. • Contract costing: contract or terminal costing involves ascertainment of cost of contract.
  • 12. Contract Costing • General Application: This method is generally found in activities like Civil Construction, ship building, interior decoration etc. • Parties involved: contractor: one who undertakes and execute work under a contract. Contractee: one for whom work is undertaken.
  • 13. Contract Costing • What are rules for recognition of profit on incomplete contracts? 1. initial stage 2. work performed but not substantial certified 3. substantially completed certified 4.almost complete 5. fully complete