Batch Costing

Batch costing is used for calculating total cost of each batch. Batch is small group of units which is produced for production purposes. We also identify batch of units in our production. All raw material is supplied on batch basis and other expenses are also paid on the basis of each batch.

For instance, in the drugs industry, producer will make the batch of tablets instead of producing single tablet. This will be easy to sell that batch in market. So, calculating cost of each batch, we will calculate material cost per batch, labour cost per batch and other expenses per  batch.  If we want to calculate cost per unit, we have to divide total batch cost with total batch units.