When Is a Volume-Based Cost System Appropriate for a Service

question 10

Multiple Choice

When is a volume-based cost system appropriate for a service company?

• A)A volume-based cost system is always appropriate for a service company.
• B)A volume-based cost system is never appropriate for a service company.
• C)A volume-based cost system is appropriate for a service company when certain customers require more attention and a higher level of service than other customers.
• D)A volume-based cost system is appropriate for a service company when every customer places a similar demand on the company's resources.

---

Definitions:

Sales Journal

A specialized accounting journal used to record all sales of merchandise on credit.

Cash Sales

Cash sales are transactions where payment is made immediately in cash or through electronic means at the time of purchase, without extending credit.

Credit Sales

Sales made by a business where payment is delayed, as opposed to cash sales where payment is immediate.

Cash Receipts Journal

An accounting ledger that tracks all cash inflows or receipts of a business over a period.