Service Costing and Retail Inventory Method

SERVICE
COSTING
C O S T I N G A N D
P R I C I N G

Presented by: Tropang Potchie

 “Always believe that something wonderful is about to happen”

Service Costing
Service costing
determines the cost per
unit of a service
rendered. It involves
determining the cost of
specific services and
functions like
maintenance and
personnel services.
“Success is not final; Failure is not fatal; it is the courage to
continue that counts”. - Winston S. Churchill
Organization that used
Service Costing

Service Firms Internal Services

Business that Certain division of
rendered services an organization that
outside entities of renders services to
their organization. other departments
within the company.
 Features of Service Costing

Periodical Multiple Valuation of

Cost Intangible Cost unit
Ascertainment Stages and working-in-
Classification of Costs Processes progress Products differs

The Costs are The costs are The conversion of Monitoring work-in- Services are Service organization
classified into determined basic materials into progress is provided to the provide a wide
variable and fixed. periodically services involves comparatively public instead of variety of services
many stages and easier for services tangible goods resulting in different
processes. firms than cost units.
manufacturing Cost Unit - is a
firms since the quantitative
services are term
delivered to the representing the
customer in real type of service
time organization
where the cost is
determined.
“Failure is not the opposite of success it is part of success”
“Push yourself, because no one else is going to do it for you“
“Your Grades
are not your
destiny:
they‘re just
letters and
numbers
which rate
how well you
performed in
one artificial
arena, once”
 Service Costing and Retail Inventory Method

RETAIL
INVENTORY
METHOD
C O S T I N G A N D
P R I C I N G

Presented by: Tropang Potchie

 “Believe in yourself and anything is possible“

Retail Inventory Method

Retailers use the retail
inventory method to
estimate the ending
inventory balance. It is
based on the relationship
between the cost and retail
price of the merchandise.
Although the retail inventory
method is a quick and easy
way to determine an
approximate ending
inventory balance.
 Issues associated with RIM
It is only an estimate
it only works for consistent markup in all products sold.
it assumes that the historical basis for the markup percentage
continues into the current period
This method does not work if an acquisition has been made and if the
buyer holds large amounts of inventory at a different markup
percentage from rate used by the purchaser.

Terms associated with RIM

“Be there for others, 1. Product cost percentage - Percentage increased
concerning a product‘s cost and selling price.
but never leave 2. Cost of Sales - Total costs used to create a
yourself behind” - product that has already been sold
3. Sales markdown - It is the decrease in the value
Dodinsky of a product‘s original retailprice and its actual
selling price.
“Don’t sit down and wait for the opportunities to
come. Get up and make them” - Audrey Hepburn
“Be yourself, because an original is worth more than a
copy”
 additional info to solve selling amount

1-18 Close notes

Part 1 multiple choice
Part 2 Identification
19-35 Computation (close notes)
19-28 Service Costing
29-35 Retail Inventory Method

“Honesty is often very hard. The truth is often

painful. But the freedom it can bring is worth the
trying “ - Fred Rogers
 additional info to solve selling amount

Step 5: identify the new product cost

percentage if an accumulated promo
amounting to ₱100,000 was given to
the customers for the said month.

“I’d rather be honest than impressive“

 GROUP 3
MEMBERS
MOSTAJO
BUENVIAJE
KANAKAN
MANALO
PASCO