Product costing is the determination of an actual cost of a product, after adding different expenses incurred in various departments of an organization. Whereas estimation is finding likely cost of manufacturing the product i.e. before it’s produced.
Following are few of the differences between estimating and costing:
* Estimating is used to arrive at the probable cost of the product before its manufactured, while costing is the determination of actual cost of the product by adding various elements of expenses incurred at various levels.
* Estimating forecasts about the probable cost and hence one can know before manufacture that the manufacturing of the product shall be profitable or not and whether one should manufacture it or not, but costing tells only after the manufacture of the products about it profitability.
* Estimating requires a highly technical knowledge. Hence an estimator is basically an engineer and costing requires the knowledge of accounts and therefore, costing is done by an accountant.
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