What is operating costing, Cost Accounting

Assignment Help:

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.

 


Related Discussions:- What is operating costing

Requirements of uniform costing, Requirements of Uniform Costing 1. Un...

Requirements of Uniform Costing 1. Uniform costing systems must process the given features as: 2. Cost reports and statements should be organized and laid out in a same for

The cost per complete unit, In a given period production and cost data were...

In a given period production and cost data were as follows:     Total Costs   Materials   Rs. 5,115                      Labour          3,952                     Overheads

Labour Costs and Overhead Costs, Labour Costs and Overhead costs Labo...

Labour Costs and Overhead costs Labour Costs Labour costs can be indirect or direct labour costs. Direct labour cost refers to wages paid to workers who such are directly

Determine the total after-tax annual cost, What is the total after-tax annu...

What is the total after-tax annual cost of a machine producing bolts with a first cost of $45,000 and operating and maintenance costs of $0.22 per unit per day? It will be sold for

Fund flow statement, An analysis of the fluctuations of current assets and ...

An analysis of the fluctuations of current assets and current liabilities that is working capital describes that how the working capital has decreased or increased. We want to iden

#title.suspense account, The book of Deven Verma could not be tallied. The ...

The book of Deven Verma could not be tallied. The account transferred the difference of Rs. 1.270 in the suspense account on the debit side. the following mistakes were found later

Illustration of overhead variance analysis, Illustration of Overhead Varian...

Illustration of Overhead Variance Analysis Again for intentions of our demonstrations in overhead variance analysis, we will suppose the given basic data for company in the pr

Traditional Costing System and Job Order Costing System, Hello, I''m curren...

Hello, I''m currently doing a research on a company and planning an Activity Based Costing system since the company is using Traditional Costing system to allocate the overhead to

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd