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Process costing is an accounting methodology used in cost accounting to allocate costs to units of production within a process-oriented manufacturing environment. It involves determining the total cost of producing a good or service and then dividing that cost among all units produced during a specific period. This approach is particularly useful for companies that produce large quantities of identical products, such as chemicals, food items, or paper products. By tracking costs at each stage of the production process, businesses can identify areas of inefficiency and optimize their operations for greater profitability. Process costing follows generally accepted accounting principles (GAAP) and is an essential tool for managing costs and improving financial performance in manufacturing industries.