What are the types of costing method?

 Costing:  There are different types of costing techniques are used in cost accounting. Costing is a technique to ascertain the cost of a product. The cost sheet is prepared to know the total cost and cost per unit of a product.

Types of methods:

Different companies used different methods to know its cost of a product. Same methods are not applied in different companies to ascertain the correct cost of a product. Types of costing methods are as follows:

1.       Job Costing: It helps to determine the cost of each job which is carried according to customer requirement and the jobs are small in numbers. In this method cost of unit is separately identified. Each job cost separately because each job is different from others. The profit and per unit cost of product is calculated with the help of cost sheet statement. For example printing company,

2.       Contract Costing:  The contract based work is come under this costing method. It is large in size in comparison to unique jobs which used job costing method. The contract job is done only on sites where job is done under job costing method in factory or workshop. For example

3.       Multiple Costing: It is not a different costing method. In this method the cost of a product is determine by using various costing method.  It does not require one method to ascertain the cost of a product. Various method used in different stages of manufacturing of a product.

4.       Batch Costing: This costing is used to determine the cost of per unit of a product where product is manufactured in batches with those who have similar in nature. In this method the cost of per unit is calculated is by dividing total cost of the batch with the number of item manufactured or produced in that batch. For example ready -made garments.

5.       Process Costing:  Those products cost are determine in this costing method which are go through various process until it reached in the state of specified finished goods. The cost of per unit is determined in different stages of a process. It helps to determine the cost of each process separately to know which process cost more or which is not.

6.       Unit Costing: This method is used by those industries which produce single products in large quantity. It is also known as output costing. For example brick making, cement companies and Mines Company etc.

7.       Service Costing: This costing is used by service rendered companies who provide services to customers like bus services, restaurant, hotels, water and Electricity Company etc. This method is also known as operation costing.

8.       Uniform Costing:  It is not a different costing method, in uniform costing method single costing method are used and its follow by similar companies which produces same products. It helps to maintain the uniform cost of a product. It also maintains healthy competition in a market. It also help to make financial report easy to understand and comparable. For example electronic industry uses same costing method.