Even Though There Are No Inventories for Service Companies, ABC

question 83

Essay

Even though there are no inventories for service companies, ABC systems are of great use for service companies. Explain why and how.

Understand how information overload can become a barrier to effective communication and ways to mitigate it.

Understand barriers to effective communication and how to overcome them.

Identify and apply effective listening techniques.

Differentiate between facts, inferences, and perceptions in communication.

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Definitions:

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead costs to products, calculated before the period begins based on the relationship between estimated overhead costs and an allocation base.

Variable Manufacturing Overhead

Costs that vary with production volume, such as utilities and indirect materials.

Machine-Hours

A measure of the time that a machine is operated, used as a way to allocate machine-related costs to products.

Fixed Manufacturing Overhead

Indirect and constant production costs that are not affected by the level of goods or services produced, including factory rent, salaries of supervisory personnel, and utility costs.