Process Costing System Essay

Process Costing System Essay

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Process costing System is an accounting expression which describes one method to determine the manufacturing costs to the units manufactured . Processing is typically used when similar units are mass produced. Also process costing system is a type of accounting process costing which is used to determine the cost of a produced inventory. Chartered Institute of Management Accountants (CIMA) defines process costing as " The costing method applicable where goods or services result from a sequence of continuous or repetitive operations or processes. Costs are average over the units produced during the period, being initially charged to the operation or process "( College Accounting Coach, 2007). Process costing is more important and appropriate for all businesses producing identical products during which production is an ongoing flow. Toyota is on the of the major companies in the world that used well-known new philosophic management to produce identical products using process costing system.
During this project, I am going to mention the details of TOYOTA production process system which was developed more than 40 years ago by Taiichi Ohno, the president of Toyota Motor company at that time. The production system that Toyota company uses now and before is relevant to the concept of the process costing system which is currently used in all department of the company.
Since more than 40 years, Toyota Company was thinking how to develop the traditional process costing system and the production system. Some of the companies believe that the increasing of the production is a big profit, while Toyota proved the opposite. The more you increase the products out of the need of the market, the more losses you are going to gain. This kin...


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...ota Production System (TPS) calls for the final product to be pulled out through the process system . This means that parts reach the assembly line in the right place whenever they are needed. This represents a final elimination for traditional system , which require large warehouse and storage in order to push the product as much as possible through the production lines, regardless of the actual demands on the product.






Works Cited




"College Accounting Coach." Process Costing-Definitions And Features(Part1) « Process Costing « Cost Accounting «. Feb. 2007. Web
"Toyota Production System: Beyond Large-Scale Production." Google Books. Web. 17 Mar. 2014.
"Toyota Production System." Toyota Australia. Web. 16 Mar. 2014.
Artoflean. "Toyota Production System Handbook." 1993. Web.Http://www.artoflean.com/files/Basic_TPS_Handbook.


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