Production Costs In The Services Sector

1. Entrepreneurs in the service sector also want to determine the costs spent on certain periods such as the purchase of various supplies, wages, and operating expenses such as payment rates, depreciation of fixed assets, business licenses, rental of shops, etc.

2. Assuming operating costs, profit margins can be estimated from its business operations.


Doctor Tan runs a clinic in Melaka. The following are the details of the business for the year ended 30 June 1999.

Additional Information:

  1. Insurance of RM180 has not expired.
  2. The electricity, water, and telephone bill of RM160 is still unpaid for June 1999.
  3. Old clinic equipment should be deducted by 10% per year

The following is a statement prepared by Doctor Tan to calculate the cost of his business operations.