WHY IS THERE A SERVICE CHARGE

Because user damage is not covered by AppleCare. If you have AppleCare+ the fee will be much lower. Here's the pricing-->iPhone Screen Repair & Replacement - Official Apple Support

Applecare for each product has a set fee for each incident of damage you claim (you get two in most cases). As to why that is, you'd be better suited asking an Apple employee using phone support, chat support or in store. They'd be better suited to be able to explain it to you. Hate to hear your phone is damaged but AppleCare will in the long run save you a lot of money on this damage and if another issue comes up. Good luck!