Study Notes management accounting acca f2

Cost per service unit = Total service costs for the period
Number of services provided in the period
.
 
Occupancy of service = 
Number of services provided in the period
Number of services available in the period 
x
100 
Service Cost Analysis: 
▪ Planned cost should be compared with actual costs. 
▪ A cost per unit of service should be calculated and it should be used as part of control function. 
▪ Prices should be calculated for services being sold to third parties, similar procedure to job costing. 
▪ Cost should be analysed into fixed, variable and semi-variable to assist in planning, control and 
decision making. 

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F2 Management Accounting
Page 58 of 147 
PROCESS COSTING
Process costing is a costing method which is applicable in industries producing homogeneous products in 
large quantities. The purpose of process costing is a typical one for example stock valuation. It is also 
called continuous order costing. 
FEATURES OF PROCESS COSTING
➢
 
Homogeneous production (Large Quantities) identical products. 
➢
 
Production is continuous (2 or 3 or more processes) like oil refining, paper making and chemical 
manufacturing. 
 
Some important terms and concepts related to process costing are as follows:
▪ If finished products are produced by more than one process, then 
output of first
process becomes 
the 
input of the next
process. 
▪ There might be some 
incomplete products
at the end of the period; they are called 
work in 
progress
units. 
▪ 
Work in progress
might 
not be complete
with respect to all the cost so