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Costing is the process by which the cost of goods sold is determined and how inventory is valued.

Costing of the inventory is an important part of any accounting system. The key challenge is to measure the cost of inventory and cost of goods sold when the per-unit costs of the some of the material in inventory changes during the accounting period. At the end of the period, the cost of the goods available for sale (the goods that have been sold and or that remain in inventory) has to be divided between the cost of goods sold and the inventory. The more cost assigned to cost of goods sold, the less for inventory.

There are a number of Costing Methodologies identified.

Also See

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