Costing approaches are methods of estimating the monetary worth of resources used to produce a product or deliver a service. These approaches involve analyzing and tracking all inputs, such as time, materials, and labor, in order to calculate costs. There are three common costing approaches: job costing, process costing, and activity-based costing. In a job costing approach, each job is treated as its own entity, with costs assigned for labor, materials, and overhead. Process costing looks at the average costs associated with multiple units of an item produced from start to finish. Activity-based costing involves assigning costs to activities that cause costs to build up over time. Regardless of the approach used, costing approaches provide valuable insights about how to optimize the production process for maximum efficiency and cost savings.