Exam 6: Service Costing

The realisation rate for a firm equals:

When calculating billable hours, which of the following should be included? I The number of hours a employee has available to service customers Ii The number of hours a employee spends on training that is related to improving customer services Iii Annual leave and sick leave

Overhead rates developed for service organisations usually include: i. upstream costs. ii. downstream costs. iii. production costs.

According to the accounting standards, the cost of inventories should include all costs incurred in getting the inventory to the point where it can be sold as intended.

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

Detail the four major differences between service and manufacturing businesses.

Which of the following characteristics apply to service organisations? i. They produce intangible outputs. ii. Services cannot be stored. iii. They purchase goods for sale. iv. Services are consumed as they are produced.

Describe how professional service firms differ from mass services entities.

A motor vehicle spare parts store is classified as:

The costs and benefits associated with service costing are influenced by the complexity of the costing system, the accuracy of the service cost information and the relevance of service cost information to managing resources and creating value.

In a merchandising business, purchases can be calculated by taking the cost of goods sold minus the cost of beginning inventory plus the cost of ending inventory.

Service product costs are inaccurate in mass service operations because of the:

To estimate the cost of transactions provided through their ATMs, banks would employ

Professional service firms will often use a billing system that is based on chargeout rates per billable hour.

Mass service entities are characterised by: i. high contact time. ii. high levels of customisation. iii. low levels of discretion. iv. front office orientation.

What is the charge rate for engineers if direct labour is $30 per hour and the overhead is calculated at 60 per cent of direct labour?

In an accounting practice, wages paid to audit clerks are classified as:

Which of the following does the cost of inventories in a merchandising entity include? i. Purchase price of goods ii. A deduction for all trade discounts iii. The cost of transport to the entity iv. Labour cost of customer service personnel

Jane Maxwell is a financial planner at Trifle Consulting. Jane's annual salary (including on-costs) is $100 000. It is estimated she works 37 hours a week and 45 weeks per year (the other weeks relate to annual leave and public holidays). She also spends 100 hours a year on non-client related work, including administrative duties (30 hours), attending training (60 hours) and idle time (10 hours). To cover both overhead costs and profit, Trifle Consulting requires a margin of 30 per cent of labour cost when calculating billable rate. What is Jane's chargeout rate per billable hour (rounded to nearest dollar)?

The value chain for a merchandising entity includes: i. design. ii. purchasing. iii. marketing. iv. distribution.