Organizations That Seek to Provide Services and Not to Make

question 7

Multiple Choice

Organizations that seek to provide services and not to make a profit are

• A) not-for-profit entities
• B) government units
• C) businesses
• D) both A and B

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Definitions:

Absorption Costing

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

Net Operating Income

Represents the difference between operating revenues and operating expenses.

Common Fixed Expenses

Expenses that do not vary with the level of production or sales, shared among different business segments or products.

Segmented Income Statement

An income statement broken down into segments, such as product lines or geographical areas, to analyze profitability.