When to use Process Costing?

Process costing is used in manufacturing companies in which almost similar products are produced which go through different phases or processes of operation to manufacture.

Since the product is almost same, production cost is computed for each of the signifcant process or phase of operation.

Like cost of production can be separatly compute for Weaving, Stitching, Dyeing and Packing processes in a textile industry.

Process Costing is used where the manufacturing process is of  same nature (Similar)

for eg, in Beverage industries,in weaving etc

Process costing is used by manufacturing industries, for a product  requiring more than one process. and Quantity and process cost/additional cost should be measurable.