Introduction of Operating Costing
Introduction of Transport costing
Format of Transport Costing
General Idea about Transport
About ABC travels
Illustration of Transport Costing
Suggestion And Conclusion
Letter of Attendance
INTRODUCTION OPERATING COSTING
Operating costing or operating costing is normally used in service sector. When the service is not completely standardized, it is the cost of producing and monitoring a service. It is a method of costing applied to undertakings which provide service rather than production of commodities.
· Meaning Of Operating Costing
Operating costing is a method of ascertaining the cost of providing or services a service. It is also known as operating costing.
CIMA London defines Operating Costing as “that form of operation costing which applies where standardized services are rendered either by an undertaking or by a operating cost renter with in an undertaking”.
· Importance Of Operating Costing
The main features of operating costing are as following:
(1) To know actual profit, total cost, expenses and also actual position of respective business.
(2) The expenses are divided into fixed and variable cost. Such a classification is necessary to ascertain the cost of service and the unit cost of service.
(3) The cost unit may be simple or composite. The examples of simple cost units are cost per unit in electricity supply, cost per liter in water supply, cost per meal in canteen etc. Similarly cost per passenger kilometers in transport cost per patient-day in hospital, costs per room-day in hotel etc. are the examples of composite cost unit.
(4) It helps in controlling the operating cost, if we do not control our operating expenses, we will not be able to compete effectively in our industry.
(5) Costs are usually computed period wise. However, in the case of utilization of vehicles, use of road rollers etc., the costs are computed order wise.
(6) Operating costing can be used for service performed internally or externally.
(7) Documents like the daily log sheet, cost sheet etc. are used for the collection of cost data.
· Application Of Operating Costing
Operating costing is very useful in determining the cost of providing services this became a base for ascertaining the price of services. Costing is extensively used in Transport industries. Hotel industries, electricity company etc. Operating costing helps an organization in ascertaining
1. Inter-departmental service prices
2. Operating cost to be charged from outside clients
3. Benchmarking the processes/operations
4. Tracking and controlling the excess
· Unit Costing And Multiple Costing
It refers to a costing method which is used when cost units are identical. Cost units that are identical should have identical costs. It is mainly used where a single product is the cost object. It is mainly used in mining,...