Page 6 - DCOM206_COST_ACCOUNTING_II

Manpreet Kaur, Lovely Professional University
Unit 1: Service Costing

Unit 1: Service Costing Notes

CONTENTS
Objectives
Introduction

1.1 Meaning of Service Costing
1.2 Features of Service Organisations
1.2.1 Nature and Characteristics of Operating Costing

1.3 Users of Service Costing
1.4 Evaluation of Cost of Various Service Organisations
1.4.1 Transport Costing
1.4.2 Power House Costing
1.4.3 Hotel Costing

1.4.4 Hospital Costing
1.4.5 Cinema Costing
1.4.6 Canteen Costing

1.5 Summary
1.6 Keywords
1.7 Review Questions
1.8 Further Readings

Objectives

After studying this unit, you will be able to:

 Define the meaning, nature and users of service costing;
 Describe the evaluation of cost of various service organisations;
 Differentiate between powerhouse costing and hotel costing;
 Describe the hospital, cinema and canteen costing with objectives.

Introduction

We often hear people using the term ‘Service Costing’ somewhat loosely. Some use it to mean
a costing system adopted by petrol pumps or garages which service motor vehicles while others
employ it to denote costing of services rendered by service centres. However, with the increase
in the important role of the service sector in the national economy, the topic has assumed
importance.
Service costing is that part of operation costing which is used in all organisations that provide
services instead of producing of goods. For calculating the price of each service, it is very
necessary to collect all the expenses relating to those services. We make a cost sheet in which we
show all the cost relating to specific service. These costs are calculated on the time basis.

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