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Cost Accounting

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Types of Processing

As stated above, process costing is used in case of industries, which involve processing of a product through different stages:

(i) Continuous sequential processing: In case of this processing, a product has to pass through different cost centres or stages of manufacturing continuously and in succession one after the other during a period. The processing being continuous and identical, the costing units for each centre or stage are identical during any period. Examples of this type of processing are cement-making, refining of crude petroleum, etc.

(ii) Discontinuous processing: In case of this processing, a process is independently operated for the individual product as such at frequent intervals. The costing unit in case of this processing dependent upon the product may vary even for the same cost centre. Examples of this type of processing are dye manufacturing, fruit preservation, vegetable canning, yarn spinning etc.

(iii) Parallel processing: In case of this processing, the operation or stages through which the product has to pass, run parallel and separately. All these parallel processes ultimately join with the end process. Examples of this type of processing are manufacturing different components which ultimately join in the assembly process to make a product, meat packing etc.

(iv) Selective processing: In case of this processing, the combination of the processes or stages of operation depend upon the end-product to be commercialized. Examples of this type of processing are cooked meat, chloride compounds like bleaching powder or zinc chloride or hydrochloride acid, etc.