Which of the Following Statements Concerning Cost Accounting for Service

question 46

Multiple Choice

Which of the following statements concerning cost accounting for service type businesses is correct?

• A) Cost accounting is not used in service business.
• B) Cost information is needed for different reasons in a service business than in a manufacturing business.
• C) To determine the rate at which direct labour costs are applied to a particular job a labour cost per hour is developed for each employee.
• D) Actual costs rather than budgeted costs are used to determine overhead application rates.

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Definitions:

Direct Labor Dollar

The total cost of wages paid to workers who are directly involved in the production of goods or delivery of services.

Rent Expense

The cost incurred for leasing or renting property or equipment, considered an operating expense in accounting.

Supervision Expense

Supervision expense refers to the cost associated with overseeing and managing workers or operations within a business.

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life.