ECONOMICS

Detailed explanation-1: -[5] Answer. Operating Costs are the costs incurred by undertakings which do not manufacture any product but provide a service. Such undertakings for example are-Transport concerns, Gas agencies; Electricity Undertakings; Hospitals; Theatres etc.

Detailed explanation-2: -Operating costs include direct costs of goods sold (COGS) and other operating expenses-often called selling, general, and administrative (SG&A)-which include rent, payroll, and other overhead costs, as well as raw materials and maintenance expenses.

Detailed explanation-3: -Costs are broadly classified into four types: fixed cost, variable cost, direct cost, and indirect cost.

Detailed explanation-4: -There is a difference between operating costing and operation costing. Operating costing is a method of costing designed to find out the cost of operating or rendering a service. On the other hand, operation costing is a method of costing applied to determine the total cost and unit cost of each operation.

Detailed explanation-5: -Product costs are those directly related to the production of a product or service intended for sale. Period costs are all other indirect costs that are incurred in production. Overhead and sales and marketing expenses are common examples of period costs.