ECONOMICS

Detailed explanation-1: -The cost unit for Goods transport organization is Ton– Kilometer – that means cost of carrying one Ton of goods over a distance of one kilometer.

Detailed explanation-2: -Method # 6 Operating Costing: For example, in the case of a bus company, operating costing indicates the cost of carrying a passenger per kilometer. Operating costing is adopted by airways railways, road transport companies (goods as well as passengers) hotels, cinema halls, power houses etc.

Detailed explanation-3: -Calculation of Cost Per Unit: In order to calculate the cost per unit, divide the total by the number of units. e.g. Total cost is 50, 000 and Passenger KMs are 5, 00, 000. The cost per passenger KM would be Rs. 0.10 (Rs.

Detailed explanation-4: -Service costing is used in the industries which are providing services. Product costing is used to find out the cost of a unit produced. Service industries like transport industry, canteen etc are using the service costing.