It is a cost calculation used by the companies which are continuously and repetitively producing a single product through a single process like cement manufacturers, ice manufacturers, noodle manufacturers, and electric bulb manufacturers. In this cost calculation, a single product is applied to a factory where it is manufactured through a single process, an thus the manufacturing cost unit is obtained by dividing the cost taken for a certain period by the quantity of product manufactured in the period. Total Process Costing is another method, which is suitable for such factories that manufacture a single product through a number of processes. In this case, the common cost taken by each process should be allocated. In any cases, how to evaluate in-process items significantly depends on the manufacturing unit cost. Thus it is important to perform proper inventory clearance and appropriate evaluation for the in-proces items as well as to make the on-site control and inventory control better.


Related term: Total Process Costing