Application of managerial concepts in the service industry

Document Type:Creative Writing

Subject Area:Accounting

Document 1

In this case, the variable of cost tends to vary when an individual loses or gains clients in business. On the other hand, the fixed value remains constant whether the client moves out of the company or not. Mixed Costs An automobile acts as the best example of a service industry applying the mixed costs. The use of a car for a business related activity sometimes involves some costs that are fixed for instance the annual insurance. In addition to these, there are other variables such as the different prices of the fuel with different uses between each month basing on the distance that the car will be driven to meet the clients (Garrison et al. Furthermore, the supplies that are used in production acts as variables especially when they are not used in the service industry.

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An excellent example of this could be the need for oil for machinery (Shephard, 2015). The supply of oil, in this case, would be used depending on the amount of production that will be taking place in the company. The cost that is encountered by the manufacturer during the packaging of commodities is also a cost variable that does not lead to the creation of any new products. Job order costing Many service organizations put into practice the aspect of job costing similar to those in the manufacturing sector (Farías, 2016). Wages in a service business A service business that employs individuals would automatically have salaries acting as a mixed cost. In these institutions, there is a fixed element which is the basic wage.

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