Process Costing example

Processing Canola (corn) oil.

We discuss how we allocate costs in process costing, but it can be difficult to think of it as anything but a mathematical exercise. let’s put it in context….

Here is an example of a process with one output that is put through a series of processes.

Notice the number of steps in the process.

How the by-product of one process (the ‘cake’) is further processed.

How waste products (normal losses) are sold and used further.

I also noticed the large number of chemicals used in the process, so I am not so convinced by the health claims at the beginning!

 

About Jonathan Rooks

Jonathan is an accountant who specialises in Mangement Accounting, the running of a business. He works with and entrepreneurs to help them increase income and reduce costs.

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