Features of operating costing

on 7:51 PM

Features of operating costing
The main features of operating costing are as following:

(1) The undertaking which adopts service costing does not produce any tangible goods. These undertakings render unique services to their customers.

(2) The expenses are divided into fixed and variable cost . Such a classification is necessary to ascertain the cost of service and the unit cost of service.

(3) The cost unit may be simple or composite. The examples of simple cost units are cost per unit in electricity supply , cost per litre in water supply, cost per meal in canteen etc. Similarly cost per passenger kilometers in transport cost per patient-day in hospital, cost per room-day in hotel etc. are the examples of composite cost unit.

(4) Total cost are averaged over the total amount of service rendered.

(5) Costs are usually computed period-wise. However,in the case of utilization of vehicles, use of road-rollers etc., the costs are computed orderwise.

(6) Service costing can be used for service performed internally or externally.

(7) documents like the daily log sheet, cost sheet etc. are used for the collection of cost data.

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