Service costing is a form of specific order costing.

Service costing is a form of specific order costing.

• A. False
• B. Not sure
• C. It depends on the service
• D. True

Answer: (A)

Costs in service industries are typically accumulated by the service or department and measured in terms of the service delivered (for example, cost per hour of service or per patient treated). This makes service costing align more with process or service-department costing, where costs are assigned to ongoing services rather than to individual, unique orders. Specific order costing, or job costing, on the other hand, traces costs to a particular job or order that is customized for a customer. Because service costing centers on the service output rather than a single customer order, the statement is not generally true. If a service is truly customized for a single client and treated as a separate job, that would use job costing, but that sits outside the standard notion of service costing.

Costs in service industries are typically accumulated by the service or department and measured in terms of the service delivered (for example, cost per hour of service or per patient treated). This makes service costing align more with process or service-department costing, where costs are assigned to ongoing services rather than to individual, unique orders. Specific order costing, or job costing, on the other hand, traces costs to a particular job or order that is customized for a customer. Because service costing centers on the service output rather than a single customer order, the statement is not generally true. If a service is truly customized for a single client and treated as a separate job, that would use job costing, but that sits outside the standard notion of service costing.