Operating Costing

Unit - 3
Meaning of Operating Costing:

Operating costing is a process and technique of

accumulating and ascertainment of cost for providing a
standardized service to the public or to an undertaking.

ICMA, London:
Operating costing is that form Wheldon:
of operation costing which
Operating costing is
applies where standardized
actually unit costing as
services are provided either
applied to the costing of
by an undertaking or by a
services.
service cost center within an
undertaking.
Features of Operating Costing:
Classification of Costs into Fixed and Variable

Ascertainment of Costs done Periodically

Stages and Processes involved in conversion of Basic Materials

Easy to Value Work-in-Progress

Accurate Estimation of Cost Difficult

Selection of Appropriate Cost Unit is Essential

 Objectives of Operating Costing

To provide a basis for fixing accurate quotation and fare

To control various costs involved

To provide cost comparison between own service and alternative service i.e.
hiring.

To compare the cost of one service center with another.

To avoid the under utilization of capacity and idle time of the work force

To decide the price that can be charged

Opportunity Costing