Batch costing

Batch costing is a form of specific order costing. It is very similar to job costing.

• Within each batch are a number of identical units but each batch will be different.
• Each batch is a separately identifiable cost unit which is given a batch number in the same way that each job is given a job number.
• Costs can then be identified against each batch number. For example materials requisitions will be coded to a batch number to ensure that the cost of materials used is charged to the correct batch.
• When the batch is completed the unit cost of individual items in the batch is found by dividing the total batch cost by the number of items in the batch.

• Batch costing is very common in the engineering component industry, footwear and clothing manufacturing industries.
• The selling prices of batches are calculated in the same ways as the selling prices of jobs, i.e. by adding a profit to the cost of the batch.

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Tags:	batch costing;costing