Cost of Services Provided

Cost of services provided (rendered) is used by labor based organizations.  Cost of services provided include labor wages, benefits, taxes, workman’s compensation insurance. It often will include transportation costs for remote site services.

Cost of Services Rendered

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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Hair Stylist Compensation Model

Salon 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.

How is Cost of Goods Sold in Retail Determined?

Cost of Goods Sold

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, a beginning and ending balance is recorded along with the purchases throughout the year.

Labor Availability – How to Calculate Maximum Available Hours

Labor 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.

This content is for Bronze, Silver, One-Time and Contractor's Diagnostic members only.
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