In Services, Tangible Elements Create the Most Value

question 10

True/False

In services, tangible elements create the most value.

---

Definitions:

Fixed Manufacturing Overhead

Indirect production costs that remain constant regardless of the level of production, such as factory rent or salaries of production supervisors.

Variable Costing

An accounting method that includes only variable production costs—direct materials, direct labor, and variable manufacturing overhead—in product costs, excluding fixed overhead costs.

LIFO Inventory

A method of inventory valuation where the most recently produced or acquired items are recorded as sold first, standing for Last In, First Out.

Absorption Costing

An accounting method that includes all manufacturing costs (direct materials, direct labor, and both variable and fixed overhead) in the cost of a product.