# Introduction to Service Costing
## What is Service Costing?
In previous chapters, we calculated the cost of goods produced in the manufacturing industry. In this chapter, we will calculate the cost of services provided by the service industry.
## Manufacturing vs Service Industry
| Aspect | Manufacturing Industry | Service Industry |
|---|---|---|
| Output | Tangible goods | Intangible services |
| Inputs | Materials, Labour, Other expenses | No direct material/labour in the traditional sense |
| Cost calculation | Per unit / kg / hour / litre | Composite cost units (per passenger-km, per room-day, etc.) |
## Examples of Service Industries
- Transportation (school bus, passenger bus, truck/lorry, taxi)
- Hotel
- Hospital
- Toll Road
- School
- Insurance
## Cost Units in Different Service Industries
| Service | Cost Unit |
|---|---|
| Passenger Bus | Cost per passenger per km |
| Goods Carriage Truck | Cost per tonne per km |
| Taxi | Cost per km |
| Hotel | Cost per room per day |
| Hospital | Cost per bed per day |
| Toll Road | Cost per vehicle per km |
| School | Cost per student |
| Insurance | Cost per policy |
## Key Idea
Since services are intangible, we use composite cost units that combine two parameters (e.g., passenger AND km) to give a meaningful measure of service output.