When Job Order Costing Is Used in the Service Industry

question 149

True/False

When job order costing is used in the service industry, the allocation of indirect costs is normally based on direct labor hours.

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Definitions:

Misallocation

The inefficient distribution of resources, often leading to missed opportunities or wasted potential.

Labor

Labor refers to the human effort, both physical and mental, used in the production of goods and services.

Efficiency Loss

The loss of economic efficiency that can occur when the equilibrium for a good or a service is not achieved or is unattainable, leading to a mismatch between supply and demand.

Empirical Studies

Research or studies based on actual and observable evidence, typically involving systematic observation or experimentation.