Effective cost calculation in service enterprises and a case study

Service sector with its wide variety and employment potential, is one of the main components of the economy in our country and in the world. In today?s world, many industrial companies make production with full automation and the demand for labor force in the industrial sector has significantly decreased compared to the past. In such an economical environment, the man power based operations and production process in service sector rise the importance of service sector in terms of employment and national income. In service sector enterprises that are significantly important in the macro economy, -it is very important to calculate costs accurately and timely, -to audit and analyze these accounts for an healthy and effective decision making. When we look at the costing systems of service sector enterprises in our country, cost accounts are not considered important enough by managers and accountants and the usage of costing data is very low in decision making processes. Naturally service costs should be calculated accurately first in order to fulfill the requirements for cost accounting in service sector. In service sector enterprises, the main principle that should be considered is that expenses should be reflected as much as possible directly to the related places in the cost accounting system. In cases where that could not be assured, accumulating indirect expenses under the main operating groups first and then distributing to the related auditing functions according to the utilization by the related staff, provides more realistic cost accounts than classical capacity distribution. Although it does not say that the costing model argued in this thesis is applicable to all types of service sector enterprises, it demonstrates that costs can be calculated on contract basis in tax consultancy/auditing firms, law offices, insurances companies etc. where services are provided on contract basis and with professional staff.