Which of the Following Statements Regarding the Service Industry And/or

question 65

Multiple Choice

Which of the following statements regarding the service industry and/or the application of management accounting techniques to the service industry is incorrect?

• A) Many of the techniques used in manufacturing firms can be adapted to suit service industries.
• B) Resources used in all service firms are predominantly variable.
• C) Direct materials are frequently a comparatively small part of the total cost.
• D) Activity-based costing is not applicable to service industries.

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Definitions:

Sober

A state of being free from the influence of alcohol or drugs, characterized by clear thinking and the absence of intoxication.

Agency Agreement

A contract in which one party (the agent) agrees to act on behalf of another party (the principal) in business transactions.

Commission

A fee or percentage of a transaction paid to an agent or broker for facilitating a sale or service.

Lease

A contractual agreement by which one party (the lessor) grants another party (the lessee) the right to use an asset, property, or space for a specified period in return for payment.