## Batch Costing
Batch Costing is a form of specific order costing where articles are manufactured in predetermined lots called batches.
### Core idea
- The cost object is the batch, not a single unit (as in unit costing).
- A batch is a set number of units processed simultaneously through a manufacturing operation.
- Inputs accumulate on the assembly line until they reach the minimum batch size, then production runs.
- Per-unit cost = Total batch cost ÷ Number of units in the batch.
### Why batches?
Producing a single item of a design is uneconomical. For example, making one pen of a particular design to meet one customer's demand is far too costly; producing 10,000 pens of the same design spreads set-up and fixed costs and reduces cost per unit substantially.
Batch costing suits homogeneous products produced in lots — pharmaceuticals, components, garments, etc.