Operating costing system is a system of cost accounting applied by those units which are not
producing goods but those which are producing services for the bene t of the consumers and their
clients. Operating costing is also known as service costing, is a method of costing which is used to
ascertain the cost per unit of services rendered. The emphasis under operating costing is on the
ascertainment of cost of services rather than on the cost of manufacturing a product. Such services
may be used within the enterprise (Canteen boiler house) or may be rendered to the general public
(Transportation, Hospitals, Gas supply, Cinema halls, Electricity etc.,).
The operating cost is just like the unit cost or the output cost as the cost per unit of the
service rendered is required to be ascertained in this method by preparing operating cost sheet.
But the main difference between the cost sheet of the output and the cost sheet of service