Transport & Service Costing

Transport & Service costing Service Costing Unit costing is the method of costing used when the cost units are identical. Identical cost units should have identical costs and this concept of equality of costs is the basic feature of unit costing. It may be noted that process costs, output costing and service costing are the sub-divisions of unit costing method. Service Costing – Nature and Problem: Service or operating cost is the cost of providing services. Service costing is the term applied to describe the system used to find the cost of performing a service such as transport, gas or electricity. Service costs are particularly suitable for the costing of road and rail transport services an they are also utilized by electricity undertaking, hospitals, canteen, boiler house, etc. the method of costing is different from that used in connection with production, and the difference lies chiefly in the manner of assembling the cost data and finally in its allocation to cost units. The principle of service or operating costing is to accumulate costs under suitable headings and to express them in terms of the unit of service rendered. Service Costing In Different Undertakings: Service costing is similar to output costing. All costs are suitably classified under fixed and variable. These costs are then collected, analyzed and expressed in terms of an appropriate cost unit. The classification of costs into fixed and variable is very important, as it draws management’s attention to the fixed costs to which they are committed regardless of the units of service ultimately given. It also indicates the change in the cost structure due to change in the operating level. |

Transport Costing:

In transport undertakings most of the statistical data required for cost finding and cost control purposes are obtained from Daily Log Report.

All repairing and maintenance work are recorded on repair tickets and are then costed.

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