Accounting Dictionary - Letter P

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Process costing
is a product costing system when costs are accumulated by departments or processes (e.g., printing department, assembling department) and assigned to a large number of homogenous, identical products. In process costing manufacturing costs are assigned to each process in each manufacturing department: assembling costs (including direct materials, direct labor, and factory overhead) in the assembling department; costs of printing (direct labor, direct materials, and factory overhead) in the printing department; and so on. Process costing is usually used by companies characterized by continuous mass production (i.e., entities that produce one or a few homogenous products).
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