If we discuss the cost of goods sold, then we can describe it as “Cost of goods cost is the cost which incurred for selling the goods of an entity”. The term “cost of goods sold ” often used for manufacturing and trading businesses. When we talk about service businesses then we will use the word “Cost of Revenue”.
In this article, we will discuss the term cost of sale, Cleaning industry, cost of revenue for the cleaning industry, and methods for calculation of the cost of revenue for the cleaning industry.
Cost of revenue:
The cost of revenue is also known as the cost of services. If we talk about the cost of revenue or cost of service, then those are costs which directly incurred in rendering services.
In the cost of revenue or services, fixed costs will not be included. Other indirect expenses likes, fixed salaries, administrative expenses will not be included in the cost of revenue.
The cleaning industry includes the services of cleaning and restoration to commercial and residential markets. The most popular services in cleaning include office interior spaces, office cleaning, window cleaning, glass cleaning, and some other customized services depends on the entity’s size and priorities.
Many cleaning businesses provide their services at the customer’s location and deliver their services at the demanded location.
Cost of Revenue in the cleaning industry:
Cleaning industry based on rendering the services, some cleaning businesses consume cleaning material by themselves like cleaning chemicals, cleaning dusters, cleaning Soaps etc. Items used to provide cleaning services will be part of the cost of sales or cost of service.
Some cleaning entities deliver their services at customer’s doorstep or home delivery services then their cost of services will be delivery expenses, carriage and other relevant cost occurred due to providing the service or sale.
Labour used to provide the service will also be included in the cost of sales or cost services if the remuneration of labour based for performing the service, mean entity not providing fix salaries to the respective labour force. If labours salaries are fixed, then it should not be included in the cost of revenue, deemed to administrative expenses.
Other than material, labour and carriage cost any additional cost which incurred to provide the service will also be included in the price of sales like commission given to any contractor or a third party, any service outsource. In short, all variable expenses to render the service will be included in the cost of sales of the business.
Any fixed cost like rents, administrative expenses, and utility expenses will not be part of the cost of sales. The cost of sales will be deducted from Sales Revenue for calculation of gross profits of the business.
Cost of sale is a very crucial part of the expense to decision making; it necessary to understand the cost of sale to determine the service’s price and gross profit margins. Without understanding and calculating the cost of sales, it might not be possible for an entity to achieve its financial objectives.
Many other factors might not be covered in this short article. I always appreciate to comment and give your feedback if you have any question in your mind about the cost of sales of the cleaning industry. I hope to see you again; keep clean your society.