Costing of Service Sector - Dani Ki Costing - CA Final Video Lectures

Costing of Service Sector - Dani Ki Costing - CA Final Video Lectures

Costing of Service Sector - Dani Ki Costing - CA Final Video Lectures | Costing of Service Sector - Dani Ki Costing - CA Final Video Lectures | Costing of Service Sector - Dani Ki Costing - CA Final Video Lectures

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Dani Ki Costing
Final Video Lectures
Costing of Service Sector
Lecture 1	Part 1
	Part 2
	Part 3
	Part 4
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Costing of Service Sector

Costing is normally carried out for goods. The tough part is calculating and apportionment of services. Service is an intangible product. In service sector, activities are mainly labour intensive. As the input for providing service may be goods or other services, it becomes very difficult to define Cost – unit. For computation of unit cost of service, the most important cost to be considered is the labor cost. Various additional overhead costs are also incurred in the service sector, which are like factory overheads in the manufacturing sector.

The data collected for costing purpose in service sector are accumulated under many heads. They are mainly grouped in two parts fixed cost and variable cost. Service sectors like hotels, transport sector etc use composite cost units like passenger km, bed nights respectively. Generally activity based costing (ABC) method is followed to calculate the cost of service sector which is then used to determine the price per cost unit.

Mainly three types of costing methods are used in the service sector viz. Job Costing Method, Process Costing Method and Hybrid Costing Method. In job Costing method, the costs for each job are monitored. In case of Process Costing method, assignment of cost of service is first made to masses of units and unit cost is derived on average basis. While Hybrid costing system is mixture of Job Costing and Process Costing Method.

The newly emerged costing technique in service sector is Customer Costing. Customer Satisfaction is taken into consideration in this method. In this technique costs are divided into three main categories i.e. Customer Specific Cost, Customer – Line Categories and Company Costs. This is a very effective as well as problematic technique as it’s very difficult to calculate customer satisfaction numerically.