Service-Sector Companies Have No Use of Variance Analysis as Only

question 40

True/False

Service-sector companies have no use of variance analysis as only few costs can be traced to their outputs in a cost effective way.

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Definitions:

Percentage-of-Sales Basis

A method used in budgeting and planning where certain costs or expenses are based on a fixed percentage of sales.

Accounts Receivable

Money owed to a business by its clients for goods or services that have been delivered but not yet paid for.

Allowance for Doubtful Accounts

A contra-asset account representing the estimated amount of receivables that may not be collected, reducing net accounts receivable to a more realistic value.

Aging Schedule

An aging schedule is an accounting table that shows the breakdown of accounts receivables according to the length of time an invoice has been outstanding.