One of the primary differences between job costing for service and manufacturing companies is service firms generally:

Question

Quizplus · Accepted Answer

Service firms typically do not use a lot of physical materials, such as raw materials or components, in their operations. Instead, their costs are primarily driven by labor, overhead, and other indirect expenses.

Answer: B
 Service firms may have less direct labor than manufacturing firms, as the focus is often on using skilled professionals or technicians rather than large numbers of manual workers.

Answer: C
 Service firms may not rely on predetermined overhead rates to allocate indirect costs to each job or project. This is because the overhead costs associated with delivering a service may be continuous rather than discrete, making it more difficult to pinpoint the precise costs associated with each unit of service provided.

Answer: D
 Service firms may not have a Work-in-Process Inventory, as they typically do not manufacture or produce physical goods that are partially completed and awaiting further processing. Instead, they may have accounts receivable or unfinished projects that are being worked on and invoiced as services are completed.

One of the Primary Differences Between Job Costing for Service