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Single or Output Costing

Single or output costing is employed in case of industries where:

(i) The production is uniform and a continued affair,

(ii) The units of production are identical; and

(iii) The cost units are physical and natural.

The system is, therefore, most commonly used in case of industries like breweries, brickworks, quarries, dairies, cement works, sugar mills, paper mills etc. In all these industries, there is a natural cost unit such as a tonne of coal or cement or sugar a lb. of paper, a gallon of milk etc.

Under this system, an analysis of the different elements of expenditure is made so as to find out the factory cost, office cost and total cost. The per unit cost can be arrived at after dividing the total expenditure by the quantity produced. The expenditure can be classified at regular intervals e.g. monthly, quarterly or half-yearly. A statement of cost or a cost sheet is made out which throws light on every aspect of cost. Comparative figures of a preceding period are also provided in the cost statement so as to enable the management in assessing the progress of the business. Sometimes, in place of the figures of the preceding period, the budgeted figures are given which enable management to know the extent to which the targets have been achieved.