In a Service Firm, It May Be Necessary to Have

question 26

True/False

In a service firm, it may be necessary to have several activity bases to properly match the change in costs with the changes in various activities.

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Definitions:

Fixed Cost

A recurring cost that does not vary with output or sales volume, including expenses like leases and insurance that remain constant no matter the business activity level.

Value Basis

The underlying value on which something is assessed or calculated, often referring to how assets, liabilities, or equity are valued in financial statements.

Unprocessed Wheat

Wheat that has not undergone any form of processing and remains in its natural state post-harvest.

Granary

A granary is a storage facility for threshed grains or animal feed.