ECONOMICS

Detailed explanation-1: -The wages or salaries a company pays its employees, including salary employees, hourly personnel and contractors, are operating costs. Operating costs also include the cost of benefits that a company pays to employees, such as health insurance, life insurance, paid time off or other benefits packages.

Detailed explanation-2: -Operation costing helps businesses account for the total cost of each operation, which allows accounting professionals to better understand and control costs. Companies often try to decrease the operating costs to their most profitable level while maintaining reliable and efficient production.

Detailed explanation-3: -Operating costing is suitable for industries which are rendering services, therefore, it is also known as service costing. This method applies in power supply companies, transport undertakings, water works, municipal corporations etc.

Detailed explanation-4: -Operation costing is an accounting method that combines job costing and process costing. Process costing is used when the differences between products are so minor that it’s not necessary to determine individual unit cost.