Service firms have high overhead costs which are difficult to assign to
individual services. To bring transparency to their value chain, they
need costing approaches that help them find their own improvements.
Markus B. Baum explores current theory and practice of value chain
approaches and cost accounting to develop a costing approach with a
suitable instrument for the allocation of fixed and overhead costs for a
service firm. He describes the service business costing (SBC) approach.
This hybrid-costing model has a hierarchical structure in terms of
consolidation and allocates cost and revenues on the lowest hierarchical
level possible to ensure that all costs and income are assigned to
activities from which they originated.