Ever wondered why different industries use different costing techniques? If you’re a banking professional preparing for JAIIB/CAIIB, understanding costing methods is crucial for financial decision-making.
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- Job Costing vs. Contract Costing
- Process Costing (when and where to use it)
- Batch Costing and its applications
- Standard Costing & Variance Analysis
This video is specially designed for aspiring and current bankers who want to enhance their accounting knowledge and ace the JAIIB/CAIIB FM exams.
👉 Before we dive in, watch this video for a complete breakdown:
Understanding Costing Methods: A Step-by-Step Breakdown
Job Costing vs. Contract Costing
(00:00:58 – 00:01:29)
- Job Costing is used when customized products/services are provided (e.g., interior design projects, manufacturing unique items).
- Contract Costing applies to large-scale projects (e.g., real estate, infrastructure projects).
✅ Key Takeaway: Job Costing deals with small, tailor-made jobs, while Contract Costing is for long-term, high-budget contracts.
Process Costing: When and Where to Use It
(00:01:29 – 00:03:00)
- Ideal for industries that use a continuous production process (e.g., textiles, chemicals, pharmaceuticals).
- Costs are accumulated for each process rather than individual products.
- Example: A company making shirts follows multiple steps like cutting, stitching, and finishing. Each process has its own cost.
✅ Key Takeaway: If your business follows multiple stages in production, you should use Process Costing.
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Conclusion
By now, you should have a clear understanding of different costing methods and how they apply to businesses. Mastering these topics will boost your confidence and help you in JAIIB/CAIIB exams.
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🔔 Stay tuned for our next session on Marginal Costing & Budgetary Control!
