BBA Cost Accounting Topic Wise Shorts Notes Of Service Costing

BBA Cost Accounting Topic Wise Shorts Notes Of Service Costing : BBA Bachelor of Business Administration 1st Year Semester Most Important notes Study Material Short Question Papers in English.

BBA Cost Accounting Topic Wise Shorts Notes Of Service Costing
BBA Cost Accounting Topic Wise Shorts Notes Of Service Costing

Bba Cost Accounting Topic wise Shorts Notes Of Service Costing, After Studying this Notes You Are Able to Understand:- Canteen Costing, Composite Cost Unit, Educational Institutions, Full Student, Half Student, Hospital Costing, Kilowatt-HOur, Operation Costing, Passenger kilometer, Power House Costing, Room-Day, Service Costing, Tonne-Kilometer, Transport Costing.

Learning objectives

  • Definition And Meaning Of Service Costing
  • Service Cost Units And Service Cost Analysis
  • Distinction Between Service Costing And Output Costing
  • Operating Cost Statements Of Transport Undertakings, Hotel, Canteens, Power House, Hospital

Bba Cost Accounting Introduction to Service Costing

Introduction

CIMA defines service costing as ‘cost accounting for services or functions ( e.g., canteens, maintenance, personnel). These may be referred to as service centres, departments or functions.

Service costing is also known as ‘operating costing’ is used for establishing costs of services rendered or services offered for sale and no items are produced. Service costing is used in service organisation like transport companies, hotels, hospitals, power generation, colleges, boiler houses etc. the method of costing is similar to output costing. All the costs incurred during a period are collected and analysed and then expressed in terms of a cost per unit of service. In practice, the cost unit used by some service organisations is given below:

The cost unit to be applied needs to be defined carefully and it is frequently a composite figure such as tone – kilometer, kilowatt – hour, patient day etc. the costing should be comprehensive enough to show the effects like off – season and peak – season demand full time part time, etc.

Bba Cost Accounting Topic Wise Short Notes of Service Costing, Topic is Service Cost Analysis 

Service Cost analysis

The service costs are usually collected under the following headings:

  1. Standing charges (fixed costs), and
  2. Running expenses (variable costs). The cost per unit is calculated as follows:

Price for the service is fixed by adding a mark – up to the cost per unit. The cost per unit of service is used for control of costs by comparing costs month by month, or period by period etc. any discrepancies over the normal is investigated for corrective action.

Application of Service Costing Service costing is applied to the operations concerned in an organisation which provide services to production departments. For example, canteen for the staff, hospital for the staff, boiler house for supplying steam to production departments, captive power generation unit, operation of fleet of vehicles for transport of raw material to factory used by other departments etc. when services are offered to outside customers with a profit motive and it is the business of the organisation in offering services, like transport organisation, hotel business, power generation company etc., service costing is applied. The method of costing is similar to output costing. All costs incurred during a period are collected and analysed and then expressed in terms of a cost unit of service.

Bba Cost Accounting Short Notes of Service Costing and Output Costing: Distinction

Service Costing and Output Costing: Distinction

The distinguishing features of service costing from output costing are below:

Bba Cost Accounting Topic Wise Short Notes of Service Costing, Topic is Transport Costing 

Transport Costing

The proformas operating cost sheet of a transport company is given in below:

Bba Cost Accounting Topic Wise Short Notes of Service Costing, Topic is Hostel Costing

Hotel Costing

The proformas operating cost sheet of a Hotel firm is given below:

Bba Cost Accounting Topic Wise Short Notes of Service Costing, Topic is Canteen Costing 

Canteen Costing

The proformas operating cost sheet of a canteen firm is given below:

Bba Cost Accounting Topic Wise Short Notes of Service Costing, Topic is Power House Costing 

Power House Costing

The proformas operating cost sheet of Power House /Boiler House is given below:

Bba Cost Accounting Topic Wise Short Notes of Service Costing, Topic is Hospital Costing 

Hospital Costing

The proformas operating cost sheet of a Hospital firm is given below:

Bba Cost Accounting Topic wise Shorts Notes Of Service Costing,

Summary

  • Service costing method is used in service industries like transport undertakings, hotels, hospitals, power generating companies , telecommunications, water supply and sewage, educational institutions, courier service etc.
  • Service costing is used for establishing costs of services rendered in terms of cost per unit of service.
  • Service costing is also called as ‘operating costing’ the price for the service is fixed by adding a making – upto the cost per unit.
  • The service costs are generally categorised into standing changes (fixed costs) and running expenses (variable costs).
  • Service costing is also applied within the organisation where some of the service centres like maintenance, boiler house, power generation, transport etc. are rendering support services to the production centres.
  • The cost materials consumed in service organisation is very less as compared to manufacturing organisations but would be capital intensive.
  • Where there is a profit motive in rendering services to outside customer, those concerns are called ‘service organisations’.

Tagged with: , ,

Leave a Reply

Your email address will not be published. Required fields are marked *

*