Wa0000.

Ness Wadia College Of
Commerce
NAME : PRAJAKTA SUBHASH KAMBLE

CLASS : MCOM PART- II, SEM- IV
DIV : A
ROLL NO. 06
SUBJECT: STUDY OF PROCESS COST SYSTEM TECHNIQUES USED IN

MANUFACTURING INDUSTRIES
INDEX
SECTION PAGE NUMBER
INTRODUCTION 3-4
COMPANY PROFILE 5-6
OBJECTIVES OF COMPANY 7
LIMITATIONS 8
RESEARCH METHODOLOGY 9 - 11
CONCLUSION 12
BIBLIOGRAPHY 13
PROCESS COST SYSTEM TECHNIQUES USED IN MANUFACTURING
INDUSTRIES
Process costing is a method used in manufacturing industries

1. Accurate Cost Calculation :
The primary advantage of using a process costing system is that it accurately calculates the cost of
producing a product. The system allocates the cost of each process, such as material, labor, and
overheads, to the product being produced. This ensures that the cost of each product is calculated
correctly, leading to accurate pricing decisions.
2. Better Cost Control :

Using a process costing system provides better cost control, allowing manufacturers to identify the
cost of each process in producing a product. This enables them to identify areas where costs can be
reduced, leading to a more efficient manufacturing process. By identifying the processes costing
more than they should, manufacturers can reduce those costs, leading to improved profitability.
3. Improved Decision Making :
Process costing provides the information needed for better decision-making. Manufacturers can
use the data generated by the system to evaluate the profitability of different products and decide
which products to produce and which to discontinue. They can use this information to identify
areas where the manufacturing process can be improved, leading to higher efficiency and
productivity.
4. Enhanced Cost Transparency :
Process costing enhances cost transparency by providing a detailed breakdown of the cost of
each process. This helps managers understand how each product’s cost is calculated and explain
it to investors and customers. This leads to better communication and a greater understanding of
the business’s cost structure.
5. Better Inventory Management :
Using a process costing system also enables better inventory management. The system provides
accurate cost data, allowing the manufacturers to calculate the cost of goods sold and the
inventory value on hand. This information is crucial for managing inventory levels, ensuring that
stock levels are neither too high nor too low.
COMPANY PROFILE
Founded in 2021, M/s. Yomindia Power Pvt Ltd has recorded growth in its operations to
meet increasing demand for manufactured components and solutions. Manufacturing Facility
spread in Constructed area of 48,000 square feet of modern manufacturing space Located at Unit
1&2 - Khed-Shivapur, Pune-Bangalore Highway, Maharashtra India. Yomindia Power Pvt Ltd
employs highly skilled people with experience using a broad range of manufacturing processes and
materials.
Yomindia Power Pvt Ltd specializes in the fields of design, manufacturing, acoustic &
ventilation solutions, and a wide range of turnkey projects. For products where quality and visual
appearance is critical, Yomindia Power Pvt Ltd excels. Equipped with latest Laser cutting machine,
Amada, Yawei make turret punching machine, CNC Bending machines and design software's enable
the company to minimize prototyping and maximise production. The just in time manufacturing
and minimized inventory practices have ensured that the customer expectations have been
consistently improved. Repeated investments have ensured success in the many
projects undertaken by the company.
OBJECTIVES
 To Ascertain the Cost of Each Process: It is necessary to know the cost at every stage of production and this fulfills by the process
costing method. On this basis, management can decide concerning the make or buy the required commodities.
 To Ascertain the Cost of Bye-Product: Bye-product is that which obtains with the main product in the course of the production. For
example; while producing mustard oil, the cake also obtains. Which terms as bye-product and the cost of which is necessary to know
the actual cost of the main product? Cost of bye-product ascertains by preparing bye-product Account, under process costing.
 To Know the Wastage in Each Process of Production: During the courage of production, different wastages, such as; loss in
weight, normal wastage, and abnormal wastage, etc. may arise. Management of any concern may know about these wastages by
Process Costing Account.
 To Ascertain the Profit or Loss of Each Process: The output or the part of output at the stage of every process can sell out either at
profit or loss. Thus the management can know about the profit or loss at every process by preparing Processes Account.
 The base of the Valuation of Opening and Closing Stock of Each Next Process: If the total cost of production of any process
divides by the number of units, we get the cost of production per unit of that particular process and on this basis opening and closing
stock of next process value.
LIMITATIONS
 1. Process costing is based on historical cost. The available cost information may not be useful for future managerial
decision-making.
 2. Unfinished units (work in process) at the end of the period are expressed in equivalent production units. This
introduces subjective element in scientific cost determination.
 3. The whole concept of process costing system is based on average costs. Average costs do not always reflect the true
costs. If there is an error in cost determination in one process, it will affect the cost estimation in subsequent processes as
well as the cost of work in process and finished products.
 4. When two or more products are produced in the same process, the joint costs are prorated to the various products using
some weightage say in terms of points. Giving weightage in terms of points is a subjective decision, which will give rise to
approximate costs and cannot be taken as fully reliable. Absence of scientific base makes the process costing inadequate
for managerial purposes.
 5. Process costing system presumes that production activity of a factory is divided according to processes. A process is an
organizational entity or section of a firm, in which specific and repetitive work is done. Thus a process becomes a practical
unit for purpose of supervision of production and often it is an unsatisfactory unit for cost accounting purposes.
RESEARCH METHODOLOGY
A research methodology describes the techniques and

procedures used to identify and analyze information regarding a specific
research topic. It is a process by which researchers design their study so
that they can achieve their objectives using the selected research
instruments. It includes all the important aspects of research, including
research design, data collection methods, data analysis methods, and
the overall framework within which the research is conducted.
Research design : should be selected based on the research question
and the data required. Common research designs include experimental,
quasi-experimental, correlational, descriptive, and exploratory.
A research design is the plan or framework used to conduct a research
study. It involves outlining the overall approach and methods that will be
used to collect and analyze data in order to answer research questions or
test hypotheses.
A well-designed research study should have a clear and well-defined research
question, a detailed plan for collecting data, and a method for analyzing and
interpreting the results. A well-thought-out research design addresses all these
features.
DATA COLLECTION METHIDS USED FOR PROJECT
PRIMARY DATA COLLECTION SECONDARY DATA COLLECTION
1. Interviews 1. Company Annual Reports

2. Surveys 2. Financial Reports
3. Questionnaire 3. Online Database
4. Statistical Methods 4. Government and Institutional
5. Collecting Data and Records
information from company’s 5. Past Research Studies
CA 6. Published Source
CONCLUSION
Process costing is an important accounting method for manufacturers that make large volumes
of identical items, such as companies in the food processing, oil and chemicals industries. For these
companies, it can be difficult or impossible to directly allocate costs to each item as it moves through the
manufacturing process.
Process costing enables companies to estimate item costs by adding up the expenses of each step in the
manufacturing process, then dividing by the number of items. To ensure accuracy, companies need to
include only product related costs from each department involved in the process and correctly allocate cost
to work-in-progress at each stage. Financial management software, particularly platforms integrated into a
larger ERP tool, can help track costs by department, as well as generate overview reports and store
historical data to monitor trends over time
BIBLIOGRAPHY
Reference :
• Website : company website www.yomindiapowww.com
• Process costing Reference from www.icmai.in
Books :
1. Cost and worksAccounting (SY BCOM )
2. Methods Of Costing ( TY BCOM
3. Advanced Cost Accounting and Application of Cost Accounting
(MCOM -I)

Wa0000.

Uploaded by

Copyright:

Available Formats

Wa0000.

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Wa0000.

Uploaded by

Copyright:

Available Formats

Ness Wadia College Of

NAME : PRAJAKTA SUBHASH KAMBLE

SUBJECT: STUDY OF PROCESS COST SYSTEM TECHNIQUES USED IN

SECTION PAGE NUMBER

COMPANY PROFILE 5-6

Process costing is a method used in manufacturing industries

2. Better Cost Control :

A research methodology describes the techniques and

PRIMARY DATA COLLECTION SECONDARY DATA COLLECTION

1. Interviews 1. Company Annual Reports

You might also like