Different sectors follow different techniques of costing because of the variations in the characteristics of their performance.
The various techniques of costing are as follows:
1. Job Costing:
In this situation the price of each job is confirmed independently. It is appropriate in all cases where perform is performed on getting a client's order like a publishing media, motor class, etc. In situation a manufacturer is a certain variety of a part at a time, say 5,000 wheels of bike, the price can be confirmed like that of a job. The name then given is Set Costing.
2. Set Costing:
It is the expansion of job costing. An order may signify a variety of small purchases approved through the manufacturer in batch. Each batch here is handled as a device of price and thus independently cost. Here price per device is established by splitting the price of the batch by the variety of systems created in the batch.
3. Agreement Costing
Here the price of each contract is confirmed independently. It is appropriate for companies involved in the development of connects, streets, structures etc.
4. Individual or Outcome Costing
Here the price of a item is confirmed, the item being the only one created like stones, hot coals, etc.
5. Process Costing
Here the price of finishing each level of perform is confirmed, like price of creating pulp and price of creating document from pulp. In technical functions, the price of each function may be confirmed separately; the name given is function costing.
6. Managing Costing
It is used in the situation of issues making services like transportation, supply of water, store business etc.
7. Several Costing
It is a variety of two or more techniques of costing defined above. Assume a company generates bikes such as its components; the parts will be priced by the program of job or batch costing but the price of building the bike will be calculated by the Individual or output costing method. The whole program of costing is known as multiple costing.