CAF-5 · Chapter 6 · Question 9 of 10
Which of the following is a specific defining characteristic of "Service Costing" compared to traditional product costing?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) The output is often intangible, and services are characterized by simultaneity, perishability, and heterogeneity.
Explanation
The study text explicitly notes that service organizations do not make or sell tangible goods, and specific characteristics of services include intangibility, simultaneity, perishability, and heterogeneity. Furthermore, direct materials are usually a relatively small component of the cost.
More Job and Service Costing MCQs
- Q1Which of the following situations is the most appropriate for applying "Job Costing"?
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- Q3What is the primary purpose of a "Job Order Cost Sheet" (or Job Cost Card)?
- Q4In a job costing system, what is the correct double entry to record the issuance of direct materials from the store to a specific job…
- Q5If materials are issued from the store to be used as general maintenance supplies on the factory floor (indirect materials) rather than…