Page 23 - Cost Accounting - Ready Reckoner
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CHAPTER – 5
Batch Costing
It is a method of costing adopted by industries producing goods in batches.
Eg. Pharmaceuticals, confectionaries, etc.
Economic Batch Quantity:
2AB
EBQ = √
C
A = Annual Production of finished goods (based on demand)
B = Batch Processing Cost per batch
C = Carrying Cost per unit per annum
EBQ in contrast with EOQ in materials, is EBQ is found for finished goods,
whereas EOQ is for raw material.
At EBQ, Batch processing cost = Carrying Cost of Finished goods, and EBQ
provides the least total cost of production.
