Where a number (batch) of identical products (cost units) are produced at one time they are often treated as one job in total and costed as such. The unit cost is therefore the total cost divided by the number of cost units in the batch.

Example
A batch of 1,000 washing machines was produced by a factory last week. Direct costs of labour and material parts charged to the job number for this batch amounted to £80,000. Overheads attributable to this production were a further £70,000.

Unit cost = Total cost = £80,000 + £70,000 = £150

Number of units 1,000

Contract costing

This applies to any very large job, usually associated with the construction industry, and often carried out at the client’s site or premises. This is another variant of job costing, so that each contract, or part of a contract, will have its own job number. However, there are a number of special features of contract costing that distinguish it from job and batch costing.

Direct costs of labour and materials still apply, but there may be additional direct costs for plant hire or work done by subcontractors. Site overhead charges can be specifically charged to an individual contract so the only overhead apportionments needed are those that relate to head office charges.

Progress payments, assessed on the value of work done, help to offset the amount of working capital needed to finance contract work. This system of payment allows contractors and civil engineering firms to carry out multi-million pound schemes with only a relatively small amount of capital.

Taken From : Accounting for Non-Accountants