10. Service Industries Flashcards
1
Q
What is service costing?
A
Costing used where the organisation or department is producing a service rather than a tangible product
2
Q
What are the 4 characteristics of a service which make it different from a physical product?
A
- Simultaneity (of production and consumption)
- Heterogeneity (differs slightly)
- Intangibility
- Perishability (cannot be stored up or purchased in bulk)
3
Q
What is the implication of the difficulty of identifying direct costs in service industries?
A
More costs tend to be overheads
4
Q
What are the most commonly used unit cost measures for service industries?
A
Time - professional services
Passenger miles or tonne/kilometres - transport
Bed days - private hospitals and hotels
5
Q
What is a composite cost unit?
A
A combined measure cost unit e.g. tonne/kilometre
