One Major Problem in Measuring the Productivity of a Service

question 43

Multiple Choice

One major problem in measuring the productivity of a service organization is the absence of:

• A) Overhead costs.
• B) A common measure for its outputs.
• C) Mandatory financial reporting.
• D) Materials costs.

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Definitions:

Variable Costing

This accounting method includes only variable costs - costs that vary with production level - in the calculation of the cost of goods sold.

Unit Product Cost

The total cost associated with creating one unit of product, including materials, labor, and overhead.

Variable Costing

An accounting method where only the variable production costs are allocated to the product, while fixed costs are treated as period costs.

Net Operating Income

The total income from operations of a company before taxes and interest deductions.