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ManjunafAa SV Mem. KS8T. NGa. 844 METHODs OF COSTING-OPERATING COSTING, OPERATING COSTING, eTe are some business concens., which do not, , produce goods, but provide, , Services. The cost of operating or providing a service is known as opcrating costing. The, method of asceitaining or finding the opcrating cost is known as operating cOsting., Examples of industies where operating costing or service costing is applied, railway, , Companies, road transport companics, airways, clectricity supply companies, gas supply, , Companics water supply companies, hospitals, cincma theatres, schools and colleges., , shipping companies, tram ways etc.., Accoring to the (CIM4) Instinte of Cost and Management Accountants /UK, , operaing coxing is, tharform of operaing eosting which applies where standardized, sernices, , are, , provided either by, , an, , undertaking', , undertaking, , or, , by, , Operating cost unit, Business concern, , Transport serVices, Goods transport services, , Electricity supply companies, Wate supply companies, Canteen, Hotel, , a, , service cost center within, , an, , Cost unit, Per passenger-km, per KM, , Per ton, per quintal, per ton-km, Per kilowatt hour(KWH), , Gallons or pints or Liters, P e r cup, , or, , per, , plate, , Per guest, per day, Per bed. Per patient, per, day, , Hospital, , > Cinema theatre, , Per man-show, , School, , Per, , head, per seat, , Characteristics of operating costing:, Services rendered, , to, , customers are unique and, standardised type., A large, total, proportion of the, capital is invested in fixed assets and, less, working capital is required., , comparatively, , The distinction between fixed, cost and variable cost is, of particular importance. This, is because the, economics and scale of, operations considerably affect the cost per, unit of services rendered.

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OBJECTIVES, OF OPERATING COSTING, The, objectives of operating costing are listed, , ., , To, , supply the information through, improved, , ., , 3.B., , To provide a bas1s for, To ensure that the, , fixing, , accurate, , services are, , below:, , which the, , efficiency, , quotation, , in, , rendering, , servIce, , and lare., , provided in proper time, and its, expenses., 5. o ensure that the consumption, T, service, are, cquipments, 6., To, provide cost comparison between own properly maintained,, service and alternative service 1.e., 7 To, , 4, , To, , 8., , To, , control the fucl, , compare the cost, detemine the, , organization., , 9, , is, , of one service center, with another., cost if the services, are, , apportionment, , To decide the, price that, 10. To control the cost, of, 11. To select efficient and, , can, , be, , charged, , for, , use, , maintenance and repairs., , hiring, , provided within an, , of vehicle, , suitable, , routing of vehicles to reduce the costs to, departments, the service., production, To, 12., avoid the under utilization of, capacity and idle time of the work force., 13. To absorb the fixed costs, that, , units of services., , uses, , proportionately and systematically that, , is, , allocated, , to the, , POWER HOUSE COSTING OR, BOILER HOUSE COSTING, Power house costing is the, process of ascertain the cost per unit of electricity, Power, , house generating cost sheet is, oenerated., prepared to ascertain cost per unit of, electricity generated. The cost of producing steam used in power.house for the, generation, of electricity is also included in the power house cost. The steam, production is the function, of boiler house but where boiling house costing statement is not desire to be, prepared, , separately. The boiler house costing part of power house costing for the reason that the, steam is, , used for the, , generation of electricity., , Power house is treated as a service development in big undertaking; the power cost, statement indicates the efficiency of the department. The cost of generation of electricity, and its distribution is compared to the cost of previous period and control is exercise on the, COSt.

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Objectives of power costing, To, , 2, , minimze, , a, , To achieve the, To, , provIde, , plant's, , overall, , optimum, , consistence, , energycost by controlling, , opealions., , electricity, , of purchase fucl and, to the plant, process steam and electricity, , cost, , as, , minium vaiation, and, , rehably respond, , to any, , change, , in, , load, , demand., , 4, , Immediately, , 5, , Fully comply with operating regulations and constrainis., POWER HOUSE COST STATEMENT, , Power house station.., , Month......, ., , Steam produce, , Unit of electricity..., , Steam used for generation ., , Generated....., , Particulars, STEAM PRODUCTION COST:, Coal and coke, Water, Water softener, , Wages-coal handling, , Wages-stoking, Repair and maintenance, , Store, , Lubricating, Supervision, Depreciation, Total production for month, Less: used in, , heating, , Total cost, ELECTRICITY GENERATION COST:, Cost of steam used, , Operator wages, Stores, , Repair and maintenance, Depreciation, Supervision, Total unit generated, , Total cost, , Cost per IB, , XXX, , XXX, , XXX, XXX, XXX, , XXX, XXX, XXX, XXX, , XXX, XXX, XXX, XXX, XXX, XXX, XXX, XXX, XXX, , XXX, , XXX, , XXX, XXX, , nceded with

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Canteen, , costing, , is, , a, , Iype, , CANTEEN COSTING, , method of ascer1aining the, , ., , To ascertain the cost of, producing meals, 2. To fix the rate of meals to be charged, Cantecn costing, , procedure, , involves the, , Select the cost unit which, 2., , is, , or, , cost, , providing meals,, , dishes, , following steps:, , usually, , cost, , per meal, , 3, , Calculate total fixed/standing charges allocated and, Calculate the total and per unit variable, , 4., , Calculate cost per meal., , Canteen costing, The expenses of canteen, , Provisions:, , are, , Example-Milk,, , charges., , shown under the, , tea,, , coffee,, , of cook,, , apportioned to canteen, , following headings, , cool, , cOoked and eggs etc., , Labour: Example-salaries, , dishes of different, , drinks, bread, biscuits,, , cake,, , vegetable, , wages of cook, assistance cook, supervisor etc, , Fuel and power: Example-gas, steam, coal, power, fire wood., , Miscellaneous expenses: Example-rent, insurance, depreciation etc., , With regard tofood provision it should be kept in view that:, I. Article should be, , kept in canteen according to the daily sales requirements, , 2. The use of refrigerators and the air conditions rooms help to preserve the food, , ingredients and quality., 3. The demand of the article in the canteen varies with change in season. The seasonal, , article should be provided according to the demand., 4. The needless and cleanliness in the canteen is very essential and it, , helps, , in the sale, , to grow., A, , monthly operating, , PET meal., , As, , most, , cost statement is, , factory, , usually prepared, , canteen are subsidized to, , deducted from the total cost, , some, , to ascertan total cost and cost, , extent, the amount of subsidy is

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Canteen cost statement, For the month of, , Items of expenses, , Wages and salaries, , Actual, , Total, , Cost, , Total, , cost, , per meal, , cost, , Budget, Cost, per meal, , Cooks, , Helpers, Supervisor, , Provisions:, , Vegetables and fruits, Meat, , Fish, eggs, , Bread and cake, Butter, Milk, Tea and coffee, Biscuits, , Soft drinks, , Miscellaneous:, Gas, , Electricity, Insurance, Rent, , Cookies and glass ware, Towels and table cloth, , Consumable store, Total cost, Less: company subsidy, , Profit or loss, Sales, HOTEL COSTING, Hotel providing daily accommodation facility to general public, have mushroomed, all over the country due to the movement provide by modem civilization to travel both on, , personal and commercial work. Hotels have many unavoidable costs such as labor, utilities, property operation cost, customer acquisition costs, etc. the first step in reducing, operation costs and increase profit margins is tracking and managing the costs. I.arge

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OPE, ManjaNatAa SVMeom. KS07. NT.BeA METHODS OF COSTINGi 1rack ther costs but it is eqnally, hotels and chains aheady meticulously, ndependent hotels and hotcs to do the same, Hotes, Fived and Variable Costsin, , The t e s variable costs and fixed costs, , that have direct relationship, , hctween those costs, , relation, , to, , operation, , is, , as, , used, , important for, , to, , distinguish, , in, , hotel, , to, , that has, hote) occupancy and those, , no, , occupy and busiess, , Fixed costs, , or salcs volume, not cffected by changes in occupancy, FINed costs are normally, voume because they do not, little drcct relatonship to the business, have, to, sad, They are, when the numbeT of sales increases and decreases, , change significantly, , Examples for fixed, , are, , costs, , I Land. building taxes to govemment, 2Wages to employees, , 3Hotel employees health premium, 4, , Out sourced, , 5, , Yearly, , services, , example: security services, all equipments, machineries and hotel, , contracted for fixed amount in, , maintenance contract, , fees (AMC) for, , a, , month, , management software's, , 6. Fixed intemet, telephone plans., 7. Advetising cost., , S. Yearly extemal auditing cost., , 9 Payroll, 10.Provision., 11.In house moves/satellite TV., Variable costs, , Variable costs, volume, , or, , are, , As business, related to hotel occupancy and business volume., decreases,, increases, variable costs will increase; as hotel occupancy, , clearly, , occupancy, , variable costs should decrease as well, , Examples, of variable costs are:, TFood, beverages, housekeeping cleaning supplies., 2. Flower arrangements., 3. Guest room amenities., 4. Guest room, restaurants and, 5. Banquet HVAC costs., , banquets linen., , 6. Stationeries used in front desk and restaurants., , 7. Chemical for laundry and water treatment plants., , 8. TA commission.

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Manjunatha, , S V Meom. K88T. NG.B.ed, , METHODS, , OF COSTING, , -, , COSTINe, iCOSTIN&, , OPERATING, , 9 Flower decorations, 10.Guest supplies amenties, 11.Guest relations, 12 1aundryoperations, , I3 Laundry unitom, , 14Pnting supphes, 15.Fntcrtainment, 16.Telephone and fax., , 17.Transportation, 18 Other, , operating supplies, , Basics of calculation in hotcl costing, , Tne convenient from measuring the accommodation, , facility 1s Jn Terms or rOom day, , COSt per rOom day means the cost of maintaining one room in usable condition for one day, When, , occupied., , Most, , of the, , costs, , in, , the, , lodging, , house, , are, , fixed, , in, , nature, , like, , depreciation, stafi salaries, maintenance etc. the distinctions between ixed and operating, , charges are rarely observed. In case the customers are provided food and drinks along with, the accommodation facility, a separate charge may be levied from them. The cost peT room, , day is arived at by dividing the total cost with the number of room day. Once the charge, per room day determined, the same is to be multiplied with the assigned weights to arrive, , at the rate to be charged for the different classes of room per day. Hotels, restaurants, , employ operating costing. The total operation of a hotel is divided into number of cost, centers., , Restaurant: cost unit is number of meals served., , Housekeeping: cost unit is number of rooms cleaned., Laundry: cost unit is number of clothes washed., Important heads of expenditure in hotel costing, . Provisions: example- vegetables, fruits, meat, flour, milk, oil, sugar., 2. Labor: example- salary of cooks, kitchen assistance,, supervisors., 3. Services: examples- steam, gas, electricity,, power and light., 4. Consumable stores: examples- crockery,, , glassware., , 5. Miscellaneous overheads: example- rent, rates,, depreciation, insurance., 6. Credit: example- changes of meals, tea and other sales

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Hotel cost sheet, , For the, , Step, , vear/Month, , osts, , Salaries to staff, , XXX, XXX, , Room attendant wages, Repan mwd renovatiom, , ghtmg and heating, , XXX, XXX, , Power, , XXX, , inen, , XXX, , Interior decoration, , XX, , Sundnes, , XXX, , Deprecation on, , Building, uniture and fixturess, Air conditions, Premises rent, , Other administration expenses, Interest on investment, , Total operating cost (1), No of room, days(2), Cost per room (1+2), , XXX, , XXX, XXX, , XXX, XXX, , XXX, XXX, , XXX, , XXX, XXX, , HOSPITAL COSTING, A concem of most countries is health sector, resources: the sources of finance for, services. The ability to maintain the fast, , health, funding levels, resource allocation patterns, and, the, efficiency, of, health, services, and, delivery., The hospitals of these countries are an, and, important element of the concern about health services because they are the largest and, , most costly operational unit of these health systems and account for a large portion fora, , m, , heath sector 1inancial, hunman and capital resource. In aggregate terms, hospitals utilize, nearly half of the tofal national expenditure for the health sector. Hospitals commonly, account for 50 to 80 percent of govemment recurrent health sector expenditure. Hospitals, , uSe a large proportion of the most highly trained health personnel. A hospital is engaged in, , prOviding various types of medical services to patients., Why are hospital costs important?, Hospital cost information is divided by relating the inputs of resources in monetary, terms to the outputs of services provided by hospital. Cost information is apart of basic, , by managers and policy makers for making decisions about how to, of ditferent hospitals, umprove the perfomance of a hospital or to compare the performance, , nformation needed, , to one another . the basic reason for wanting cost information are to improve efticiency,, , inCrease effectiveness, enhance sustainabiity and improve quality.

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METHODS OF, , S VMdom.KseT.NET. Re, , aneatha, , TRANSPORT, , 3nspot, , undertaking provides, , services, , COSTING, , Tanspot, , is, , used, , road, , n, , COSTINe, , COSTING:, , and the method, , undertakings is known as transport costing, costing, , OPERATING, , transport, , ot ascertaining cost, , services,, , taxI, , at, , ways,, , in thes, ese, , railwave, , shipping companies, Objectives of transport costing:, , Toascertain the operating cost of unning a vehicle per K M, To fix the rate of cartage of goods and passengers on the basis of operating costs, on hire., , hirc charges where vehicles are given, the cost of using own vehicles with that, , 3To deccide the, 4, , 0, , compare, , of using aternative modes of, , transpoit, , To detemine the cost to be charged to departments which use intemal transport, , facihties., Daily log sheets, A log sheets is a record which is generally maintained by the driver of the vehicle on, daily basiIs. In this log sheets are recorded most of the details required tor operating cost, , and also enable the management to avoid idleness of vehicles., Costing procedure -, , operating cost sheet, , The procedure of ascertaining cost in transport undertakings is to prepare an operating cost, , sheet. The following steps are taken in preparing an operating cost sheets., 1) Determination of cost unit or unit of services: cost unit in transport costing may, , be of the, , following two types., , i. Simple cost unit: ascertaining the cost of running a vehicle per KM or per mile., i. Composite cost unit: A cost unit is a unit of product, services or time in terms of, , which costs, , It is basically a unit of, like number, weight, length, volume, time, area. i.e., cost of a transporting, are, , ascertained, , or, , measurement, , expressed., , passenger or a tone of goods for one kilo meter., , Total KM, , No. of buses, , Passenger KM, "Total KM, , x, , No. of days, , x, , No. of trips, , x, , Distance per trip., , Capacity of each bus, X Average, passenger travelling or Normal capacity utilised., Standing and running charges, Cost per passenger KM=, =, , x, , Passenger KMs, Tonne KM= No. of lorries, , x, , No.of days, , x, , No. of tonnes, , x, , Distance per, , tra

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Standing charges:, , - These costs remain constant in total amount o v e r a ide range of, activity, speciticd period of time i.c. these do not increase or decrease when the, volume oe, production changes. For ex., of, Buildimg rent. managerial salaries remain constant arnd do not chane, wlh, e, change on output levcl and thus are fixcd costs. But fixcd cost per, unit decreases when, Or, , a, , volume of production increases, and vice, arable, , charges: - These, , costs, , other words, when, when volume, , tend, , vcrsa., to vary in, , direct, , proportion, , to the volume of, , output,, , In, volume of output increases, total variable cost also increases, and, vice, of output decreases, total variable cost also decreases. But, the variable versaa,, , cost Der, , units' remains fixed., , Problem no. 1, From the, , following information calculate total K.M and, , Number of buses, , 4, 30 days, , Days operated in month, Trips made by each bus, Distance of route, Capacity of each bus, , 40 passengers, , Average passenger travelling, , 75% of capacity, , Problem no.2 [Dec, , total passenger K.M.S, , 2, , 100K.M[one side], , 2006, Dec-2016|, transport company is running 5 buses between two cities, which are 40K.M apart,, seating, capacity of each bus is 50 passengers, and actual, passengers carried were 80% of the, seating, Each, -, , A, , capacity., , bus made, , one, , month., Find the total, passenger KMS covered, , Problem no.3 [Dec, 2007, Kumar transport limited is, , trip, , per, , day., , All the buses, , run on, , all the, , days, , of the, , during the month of November 2005., , -, , running, , apart. Seating capacity of each bus, , of the, , seating capacity., round trip per day., , four buses between two, towns which, , is 40, , All the four buses, , fifty miles, , passengers. Actual passengers carried were 75%, ran on 25, days in the month. Each bus made one, , Calculate the total, passenger KMs covered during the month, 1anile, , are, , 6 0 3 Lilomtt