What is operating costing, Cost Accounting

Describe Operating Costing

The Chartered Institute of Management Accountants, London defines "operating cost" as "the cost of providing a service." Services performed may be internal or external. Services are termed as internal where they have to be performed on inter-departmental basis in the factory itself, e.g. supplying power, gas or electricity from factory's own power-house, catering from the factory's canteen; supplying steam raised from the boiler house, repairing necessary items by the repair and maintenance department etc. Services are termed as external when they have to be provided to outside parties. Such concerns are service undertakings, e.g. transport corporations carrying loads of goods or human beings; electricity companies generating electricity or power; hospitals serving patients or carrying out operations; canteens serving meals or dishes of different varieties etc. The method employed to find out the cost of rendering a service, either internal or external, is service costing or, so to say, operating costing.

Operating costing is just a variant of unit or output costing. The method of computing operating cost is very simple. The expenses of operating a service for a particular period are grouped under suitable headings and their total is divided by the number of service units for the same period, and thus cost per unit of service is obtained. The cost for a future period may be estimated on the basis of estimated service units and the estimated costs. This will help in fixing the price to be charged for the service units and the estimated costs. Thus, the principle involved under operating costing is the same as under unit costing but they differ in the manner in which costing information have to be collected and allocated to cost units. The data about expenses are to be classified according to their nature of variability and moreover, the units of cost may be simple or composite.

 

Posted Date: 1/5/2013 7:17:06 AM | Location : United States







Related Discussions:- What is operating costing, Assignment Help, Ask Question on What is operating costing, Get Answer, Expert's Help, What is operating costing Discussions

Write discussion on What is operating costing
Your posts are moderated
Related Questions
This is difficult to perceive cash maintained in the vault as an investment. Fairly, you would be thinking that if we invest cash, then how can cash itself be an investment? Howeve

Tlie subphylum is called Uniramia because of the presence of unbranched appendages. These animals have non-jointed mandibles, uubranched appendages without any palps. They have

Prod 400000 DM cost $3 DL 24 moh v 1.80 F 4.50 products 35000 DMP12000lb@$11/lb DM use10450lb DL38500HR 880500 v moh64150 FMOH152000


Material Costs - Cost Accumulation However 'Materials' refer to the tangible inputs into the procedure of producing useful output.  They might be indirect materials or direct

A CPA firm estimates that an audit will require the following work: Type of Auditor Expected Hours Cost per Hour Standard Costs Manager 10 $50 $ 500 Senior 20 40 800 Staff 40 30

Manson Manufacturing applies manufacturing overhead at a rate of $30 per direct labour hour a)when during the year was this rate computed b)Describe briefly how this rate was

The Houston Chamber Orchestra presents a series of concerts throughout the year. Budgeted fixed costs total $300,000 for the concert season; variable costs are expected to average

prepare a trading and profit and loss accounts for the period using marginal costing and absorption costing

Alger Corp wants to buy some construction equipment for $50,000, which has a useful life of 4 years with no salvage value. Alger uses straight-line depreciation. Alger has a tax ra