Question

What is Composite Unit?

Hint:

Composite unit = combined measure for better cost accuracy.

Answer 1

A Composite Unit is used in operating costing where the service provided cannot be measured by a single simple unit.
It combines two or more related measures to express the output more accurately.
For example, in transport costing, output may be measured in ‘ton-kilometres’ or ‘passenger-kilometres’ — here, distance and weight or number of passengers are combined.
Similarly, in hotels, ‘room days’ or ‘bed nights’ are used.
Composite units help in realistic cost calculation where both capacity and service time are important.
They ensure correct cost per unit of complex services.