Service Industry Costing

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The use of service/operation costing

Service organisations do not make or sell tangible goods.

An example of a service organisation can be an accountancy firm, here the material cost will be very low and labour/expenses will be very high.

  • In fact, the output of service organisations/departments can be described as:

    Simultaneous production and consumption
    Heterogeneity – the nature and the standard of the service will be variable
    Intangibility
    Perishability – cannot be stored

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