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Service and operation costing

Service and operation costing

Service costing is a form of continuous operation costing. The output from a service
industry differs from manufacturing for the following four reasons:

 Intangibility – the output is in the form of ‘performance’ rather than tangible or
touchable goods or products.

 Heterogeneity – the nature and standard of the service will be variable due to
the high human input.

 Simultaneous production and consumption – the service that you require cannot
be inspected in advance of receiving it.

 Perishability – the services that you require cannot be stored.

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