Explain process costing.
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Process costing is a costing method used in industries where products or services pass through multiple stages of production in a continuous flow. It is suitable for industries with standardized and repetitive production processes, such as chemical manufacturing, food processing, and textile production. In process costing, costs are accumulated and averaged over the total units produced during a specific period, rather than being traced to individual units. The total cost incurred in each production department or process is divided by the total number of units produced to determine the cost per unit. This allows for the uniform allocation of costs across all units produced, providing a standardized cost for valuation purposes. Process costing facilitates cost control, performance evaluation, and inventory valuation in industries with continuous production processes.