Batch costing is another form of job costing which is adopted in case of manufacturing of a large number of components of machines or of other articles. Since a large number of them are manufactured together and pass through the same process of manufacture, it is convenient to collect their cost of manufacture together.
The following are features of batch costing system:
- Batch costing is applied in industries where identical products are produced.
- A batch is a cost unit which consists of a separate, readily identifiable group of product units which maintains its separate identity throughout the production process.
- The output of batch consists of a number of units and it is not economical to ascertain cost of every unit of output independently
- The procedure is very similar to job costing: (a) Each batch is treated a job and costs are calculated for total batch. (b) On completion of production cost per unit is found .