What is Service costing?

What is Service costing?

• A. Service costing
• B. Continuous Operation Costing
• C. Batch costing
• D. Job Costing

Answer: (A)

Service costing is the method used to determine the cost of delivering a service. In service industries, outputs are intangible, so costs are accumulated by the service provided or by unit of service, and a cost per unit of service is calculated. This approach is used for activities like in hospitals, airlines, hotels, or utilities, where you measure what each unit of service costs—such as cost per patient-day, cost per hour of consultancy, or cost per passenger-kilometre. It differs from other costing methods because those focus on tangible products or specific jobs or batches; service costing targets the cost of providing the service itself rather than goods produced or orders fulfilled.

Service costing is the method used to determine the cost of delivering a service. In service industries, outputs are intangible, so costs are accumulated by the service provided or by unit of service, and a cost per unit of service is calculated. This approach is used for activities like in hospitals, airlines, hotels, or utilities, where you measure what each unit of service costs—such as cost per patient-day, cost per hour of consultancy, or cost per passenger-kilometre. It differs from other costing methods because those focus on tangible products or specific jobs or batches; service costing targets the cost of providing the service itself rather than goods produced or orders fulfilled.