When job costing is used at a service company, direct costs of serving the client are traced to the job, whereas the indirect costs of serving the client are allocated to the job.

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This is because direct costs are easily traceable to a specific job, such as labor and materials used for a specific client's project. However, indirect costs, such as overhead expenses like rent and utilities, are allocated based on estimates and are not easily traceable to a specific job.

When Job Costing Is Used at a Service Company, Direct