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Unit 1: Service Costing
Self Assessment Notes
Fill in the blanks:
9. The …………………… costing refers to the determination of the cost per unit of service
i.e., cost of per passenger – kilometre and the cost of per tone – kilometre.
10. A daily log sheet or log book is maintained for each vehicle to record details of each
…………………… .
11. A statement of …………………… is prepared to find out the cost of per unit.
12. …………………… services include boarding and lodging.
13. Costing of …………………… may relate to ascertaining the cost of medical services
rendering by a Nursing home or dispensary belonging to an industry or organisation.
14. The sale of meals and subsidy bring in revenue for the …………………….
15. …………………… defines Service Costing as the cost of specific services and functions,
e.g., maintenance, personnel, canteen etc. These may be referred to as service centres,
departments or functions.
Case Study Reducing Service Costing in Logistics
noll Incorporated is a global leader in office furnishings, design and manufacturing.
Increasing cost pressures caused the company to source lower cost components in
KAsia. Although improved pricing was achieved, delivery reliability was extremely
poor, and transportation costs were eroding potential savings. The company required a
cost-effective international transportation management process with increased visibility.
Penske’s solution to develop a single-provider process with responsibility for vendor
management, transportation, order management, warehousing and container consolidation
resulted in ocean/air freight savings and increased order visibility, yielding nearly a
50 percent reduction of air freight requirements.
Challenges
To reduce international/air/ocean transportation costs
To increase overall visibility throughout Knoll’s supply chain
To establish international supplier conformance standards
Reduced International Transportation Costs, Improved Customer Service
Penske’s China-based team manages Knoll’s orders from inception to actual pick-up at the
supplier’s dock. This detailed product availability and visibility reduces Knoll’s
transportation costs by routing its shipments using the most economical mode, while
Penske continues to explore consolidation opportunities on each shipment.
Penske’s intimate understanding of the product and manufacturing process allows for
proper routing of materials to either the manufacturing facility in the United States or to
a de-consolidation point for line-hauling the needed product to the proper facility. Once
the product is delivered, Penske continues to provide value to Knoll by providing a
single, itemized weekly invoice for all international shipments and detailed performance
reporting on all activity managed.
Contd...
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