SERVICE ( OPERATING COSTING) 1

Ø  SERVICE (OPERATING COSTING)
COST ACCOUNTING

Ø  SERVICE COSTING

1. SERVICE OR OPERATING COST REFER TO COST OF UNDERTAKING WHICH DO NOT MANUFACTURE ANY PRODUCT BUT WHICH PROVIDES SERVICES
2. SERVICE COSTING APPLIES WHERE STANDARDIZED SERVICES ARE PROVIDED
3. MAY BE USED WHERE SERVICE IS NOT COMPLETELY STANDARDIZED
4. IT IS THE COST OF PRODUCING AND MAINTAINING A SERVICE
5. SERVICES MAY BE INTERNALLY USED E.G CANTEEN,DELIVERY VAN,BOILER HOUSE ETC
6. MAY BE RENDERED TO THE PUBLIC AS IT IS DONE BY HOSPITALS,ELECTRICITY,GAS COMPANIES ETC
7. IN BOTH THE SITUATION OPERATING COST HAS TO BE ASCERTAINED
8. SERVICE COSTING IS APPLICABLE :

a)    TRANSPORT SERVICES

b)    SUPPLY SERVICES

c)    WELFARE SUPPLIES

d)    ENTERTAINMENT SERVICES

• BASIC FEATURES

1. CONCERNED WITH THE DETERMINATION OF REPETITIVE SERVICES AND ALSO SIMILAR TO UNIT COSTING IN THE SENSE TOTAL COST INCURRED DURING A PERIOD IN SERVICE DIVIDED BY THE TOTAL NUMBER OF COST UNITS OF THE SERVICES
2. STANDARDIZED SERVICES
3. INVESTMENT IN FIXED ASSETS IS HIGH AND WORKING CAPITAL IS LOW
4. MAJOR COST IS FIXED COST

• CATEGORIZATION OF VARIOUS CHARGES IN RENDERING SERVICES:-

1. STANDING CHARGES
2. MAINTENANCE CHARGES
3. OPERATING CHARGES
4. FIXED CHARGES
5. VARIABLE CHARGES
6. SEMI VARIABLE CHARGES

• TRANSPORT COSTING

1. TRANSPORT INDUSTRIES INCLUDE AIR,WATER,ROAD AND RAILWAYS.
2. METHOD OF KNOWING COST IN TRANSPORT INDUSTRY IS KNOWN AS TRANSPORT COSTING
3. DETERMINING COST PER SERVICE UNIT FOR AIR,WATER AND ROAD TRAFFIC BOTH FOR GOODS AND PASSENGERS
4. MOTOR TRANSPORT INCLUDE PRIVATE TAXIS,CARRIER FOR OWNERS,BUSES,PRIVATE CARS,LORRIES ETC

• OBJECTIVE

1.     TO JUDGE THE EFFICIENCY WITH WHICH THE VEHICLES ARE RENTED

2.     ACCURATE BASIS FOR QUOTATION AND FIXING OF RATES

3.     COST COMPARISON BETWEEN OWN TRANSPORT OR RENTED TRANSPORT

4.     COST OF MAINTAINING OF ONE GROUP OF VEHICLE WITH ANOTHER GROUP

5.     TO DETERMINE THE COST TO BE CHARGES TO VARIOUS DEPARTMENTS USING THE SERVICE

6.     TO ENSURE THAT ALL JOURNEY HAVE BEEN CARRIED OUT IN PROPER TIME,FUEL CONSUMPTION ETC

• CLASSIFICATION OF COSTS

1. STANDING OR FIXED CHARGES:-SALARY OF OPERATING MANAGER,SUPERVISORS ETC INSURANCE,MOTOR VEHICLE TAX.LICENCE FEE,GARAGE RENT,GENERAL SUPERVISION,OFFICE EXPENSES SALARY OF DRIVERS,CLEANERS,CONDUCTORS,DEPRECIATION ETC
2. MAINTENANCE CHARGES:- SEMI VARIABLE EXPENSES FOR EXAMPLE SALARY EXPENSES OF GARAGE STAFF,CONSUMABLE STORES,TYRES AND TUBES,REPAIRS AND PAINTINGS,RENEWAL AND OVERHAULS ETC
3. OPERATING AND RUNNING CHARGES:- VARIABLE CHARGES.IF DEPRECIATION TO BE CHARGED ON THE BASIS OF KILOMETER RUN,PETROL,OIL,GREASE,WAGES OF DRIVERS,CONDUCTOR AND ATTENDANT RELATED TO TIME OR TRIP OF THE DISTANCE OF THE TRIP

4.     IN CASE OF SERVICES ARE RENDERED TO PUBLIC : CUSTOMER WISE DETAILS OF EACH TRIP ANDD IF INTERNALLY DEPARTMENT WISE UTILIZATION STATEMENT.

Ø  DAILY LOG SHEET

1. A LOG SHEET IS A RECORD MAINTAINED FOR EACH VEHICLE FOR THE PURPOSE OF COST COLLECTION AND COST CONTROL,
2. MAINTAINED BY DRIVER ON DAILY BASIS
3. DETAILS : JOURNEY RUNNING TIME,CAPACITY,DISTANCE COVERED,COST OF PETROL,DIESEL,LUBRICANTS,ACCIDENTS,LOADING AND UNLOADING TIME
4. WILL HELP IN ASCERTAINING THE COST BUT ALSO ENABLE THE MANAGEMENT TO AVOID IDLENESS OF VEHICLES ETC

• COST UNITS USED IN SERVICE COSTING

1. SIMPLE COST UNIT:- A COST UNIT IS SAID TO BE SIMPLE COST UNIT WHEN IT INVOLVES ONE FEATURES FOR EXAMPLE : IN CASE OF CANTEEN PER ITEM OR PE MEAL,TRANSPORT PER KILOMETER
2. COMPOSITE COST : TWO OR MORE CHARACTERISTICS

1. TRANSPORT:-PER PASSENGER K.M O PER TONNE
2. HOSPITAL : PER PATIENT PER DAY OR PER BED PER DAY
3. HOTEL:- PER ROOM OR PER MEALS
4. POWER : PER KILO –WATT HOUR

• STEPS

1. SELECTION OF COST UNITS
2. COMPUTATION OF COST
3. ASCERTAINMENT OF COST