Tag: Cost of Services Provided
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Cost of Services Rendered
Service based operations do not use the traditional retail based format for the profit and loss statement which utilizes a ‘Cost of Goods Sold’ section, instead the service industry uses a ‘Cost of Services Rendered’ segment. The presentation format is very similar though.
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Carpet Cleaning Service – Margins and Expenses
A very common small business in the service industry is the carpet cleaner. Many owners of such businesses desire to know the margins and of course the associated operating expenses involved.
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Hair Stylist Compensation Model
One of the most fascinating business models is the hair salon industry. Many salons are poorly managed and rarely generate adequate profits. To make matters worse, the stylists are like professional sports players. One week they are playing for this team, and next week they are on a new team. In effect, they switch salons. It often happens…
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How are Cost of Goods Sold in Retail Determined?
Each industry is different in determining costs of goods sold or cost of services rendered. Retail uses two distinct methods to calculate costs of goods sold. The first is called ‘Specific Identification’ whereby each item sold is specifically identified to its recorded cost. The second method is referred to as ‘Inventory Adjustment’ format. In this method,…
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Labor Availability – How to Calculate Maximum Available Hours
Every service related business wants to maximize the hours the staff bills or provides services to customers. When they are working, the business gets to bill for time and generate revenue. Maximum revenue means the best chance at creating the highest profit.
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What is ‘Cost of Goods Sold’?
Simply put, ‘cost of goods sold’ equals the direct costs of materials, human resources, and equipment needed to produce the item sold. However, this can be confusing because there are many marginal cost items that affect the real cost of producing and selling the item.