Mixed costing is required when DIFFERENT processes are used to manufacture the same material. Mixed costing is required when you have different sources of supply for purchasing the material.

Let us take an example:-

There is a finished good Xylene which can be manufactured by 3 different processes.

The first process uses an old machine and labour. The processing time is 9 hrs to manufacture.

The SECOND process uses a semi-automatic machine and labour. The processing time is 7 hrs to manufacture.

The third process uses a fully automatic machine and the processing time is 5 hrs. Thus cost of manufacture for the 3 processes is different. By using Mixed costing you can CREATE a mixed price for the valuation of this finished good.

Mixed costing is required when different processes are used to manufacture the same material. Mixed costing is required when you have different sources of supply for purchasing the material.

Let us take an example:-

There is a finished good Xylene which can be manufactured by 3 different processes.

The first process uses an old machine and labour. The processing time is 9 hrs to manufacture.

The second process uses a semi-automatic machine and labour. The processing time is 7 hrs to manufacture.

The third process uses a fully automatic machine and the processing time is 5 hrs. Thus cost of manufacture for the 3 processes is different. By using Mixed costing you can create a mixed price for the valuation of this finished good.