Service Costing versus Product Costing:
Service costing differs from product costing (such as job or process costing) in the following ways due to some basic and peculiar nature.
(i) Unlike products, services are intangible and cannot be stored, hence, there is no inventory for the services.
(i) Use of Composite cost units for cost measurement and to express the volume of outputs.
(ii) Unlike a product manufacturing, employee (labour) cost constitutes a major cost element than material cost.
(iii) Indirect costs like administration overheads are generally have a significant proportion in total cost of a service as unlike manufacturing sector, service sector heavily depends on support services and traceability of costs to a service may not economically feasible.
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