CIMA BA2 Syllabus C. PLANNING AND CONTROL - Service Industry Costing - Notes 2 / 7
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