ABC for Service Companies Homework Help

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What is ABC?

ABC, is an abbreviation for Activity Based Costing. Just like traditional manufacturing costing process, even ABC tries to sort all the costs applied into a production process to determine the final cost of the product. With the manufacturing industry experience, activity based costing is also applied in many service industries too. In this article for ABC for service companies homework help we discuss the importance of ABC in service companies.

Service Industries

Industries like hospitals, banks, insurance companies etc. are a few examples for service industries. Their main role is to provide services to the consumers instead of products and then benefiting from it. In our ABC for service companies homework help article, the accounting system for the monetary calculation included in service industries are helpful in raising the profit of it.

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Role of Activity Based Costing in Service Industries

One way to determine the profit is to compare the offered services with the cost of each service to be delivered. For example, a hospital can compare the amount it takes to do an operation and compare it with the generated bill to ensure the profit earned.

In our ABC for service companies homework help article we define ABC as a scenario that sees the total cost of a single product or service but does not look at cost consumed by the entire department. A comparison among the costs invested upon various products manufacturing in a single company is done and hence the product is sorted with the highest investment to set its price.

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