Question 1

Which of the following are repetitive services for a retail hardware store?

Accepted Answer

Check-out services are repetitive because they are performed for every customer who makes a purchase. Special delivery services, advice to customers on the use of equipment, and processing customer complaints are not repetitive because they are only performed as needed/requested.

Question 2

Which of the following statements describe a difference between the value chain of a service firm and the value chain of a merchandising firm?

Accepted Answer

The answer of Which of the following statements describe a...

Question 3

Which of the following does the cost of inventories in a merchandising entity includes?
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

Accepted Answer

The cost of inventories in a merchandising entity includes the purchase price of goods and a deduction for all trade discounts. It also includes the cost of transport to the entity, but does not include labor costs of customer service personnel. Therefore, the best choice is option B (i, ii, and iii).

Question 4

Which of the following does the value chain for a merchandising entity include?
i.Design
ii.Customer support
iii.Purchasing
iv.Production/sales transaction

Accepted Answer

The answer of Which of the following does the value...

Question 5

Which of the following statements is most correct with respect to chargeout rates?

Accepted Answer

The answer of Which of the following statements is most...

Question 6

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 charge out rate per billable hour (rounded to nearest dollar)?

Accepted Answer

The answer of Jane Maxwell is a financial planner at...

Question 7

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

Accepted Answer

Professional services involve high contact time as clients typically require a lot of interaction with the service provider. High levels of customisation are also a defining characteristic as clients often have individual, unique needs. Additionally, front office orientation is important as the service provider must have direct interaction with the client. However, discretion is actually a high priority in professional services, as clients often trust the service provider with confidential and sensitive information. Therefore, option A is incorrect because it includes low levels of discretion. Option B is incorrect because it includes low discretion and does not include front office orientation. Therefore, option C is the best choice. Option D is clearly incorrect.

Question 8

Which of the following descriptions best explains the difference between a billing system and a costing system for a service firm?

Accepted Answer

A billing system is focused on determining and tracking what to charge clients, often based on billable hours or other chargeout rates, while a costing system is concerned with tracking the actual costs incurred by the firm in providing its services. Option D combines both key aspects of a billing system, making it the most comprehensive choice.

Question 9

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

Accepted Answer

Mass service entities typically have low levels of discretion due to the standardized nature of their services, which contrasts with high customization or high contact time.

Question 10

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

Accepted Answer

The answer of Which of the following statements regarding the...

Question 11

A professional audit firm charged juniors at $50 per hour,seniors at $200 per hour and the overhead rate for both was 100 per cent on direct labour.The firm added 5 per cent on total cost to arrive at a fee to be charged.If a job took 10 junior hours and 2 senior hours,what was the total cost?

Accepted Answer

The answer of A professional audit firm charged juniors at...

Question 12

Which of the following does the value chain for a service shop include?
i.Design
ii.Customer support
iii.Purchasing
iv.Production/delivery

Accepted Answer

The value chain for a service shop includes design, customer support, and production/delivery. Purchasing is not typically a significant part of the value chain for a service shop. Therefore, the best choice is C, which includes all three relevant options.

Question 13

Which of the following is NOT a description of a mass service provider?

Accepted Answer

Mass service providers typically have a high number of standardized services, with little customization, and employees have very little contact time with customers. Equipment is a key input, and the emphasis is on minimizing discretion by employees.

Question 14

Which of the following cost classifications do not apply to service organisations?
i.Direct/indirect
ii.Fixed/variable
iii.Production/non-production
iv.Controllable/uncontrollable

Accepted Answer

Production/non-production cost classification does not apply to service organizations as they do not have a tangible product that can be produced. Direct/indirect and fixed/variable cost classifications are relevant to both manufacturing and service organizations. Controllable/uncontrollable cost classification may not be relevant to all organizations, regardless of their industry type.

Question 15

Which of the following correctly describes the way firms would set their chargeout rates per billable hour?

Accepted Answer

Charge-out rates per billable hour in firms can be influenced by a variety of factors including covering costs, matching competitors' rates, and adhering to professional recommendations. Therefore, any or all of the given answers can correctly describe how firms set their rates.

Question 16

Hybrid costing of services is appropriate where:
i.there is significant front office involvement
ii.equipment is a key input
iii.there is no discretion in service production
iv.there is a very low number of services produced

Accepted Answer

Hybrid costing of services is typically used when there is a mix of characteristics from both job costing and process costing environments. It is appropriate in situations where services involve both standardized and customized elements, not specifically limited to the conditions mentioned in the options. None of the given statements accurately capture the essence of when hybrid costing is appropriate, as it can be suitable in scenarios with high front office involvement, where equipment is a key input, where there is discretion in service production, and regardless of the number of services produced.

Question 17

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

Accepted Answer

Firms in the service industry can use job costing or process costing systems depending on the nature of their services. It is not necessary to use only process costing systems.

Question 18

The realisation rate for a firm equals:

Accepted Answer

The realisation rate for a firm is the actual fee charged divided by the firm's billing system fee. This measures how effectively the firm is able to turn the time it spends on client work into billable revenue. Choice D is the only option that correctly reflects this calculation.

Question 19

Which type of costing for their services are mass service entities likely to use?

Accepted Answer

Mass service entities, such as hotels or airlines, are likely to use process costing as they provide a standardized service to a large number of customers. Process costing is used when a large number of identical products or services are produced, and the cost is spread across all units.

Question 20

Which of the following statements best completes the following sentence? 'A realisation rate below 100 per cent indicates that the firm …'

Accepted Answer

The answer of Which of the following statements best completes...

Quiz 6: Service Costing

Which of the following are repetitive services for a retail hardware store?

Which of the following statements describe a difference between the value chain of a service firm and the value chain of a merchandising firm?

Which of the following does the cost of inventories in a merchandising entity includes? 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

Which of the following does the value chain for a merchandising entity include? i.Design ii.Customer support iii.Purchasing iv.Production/sales transaction

Which of the following statements is most correct with respect to chargeout rates?

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

Which of the following descriptions best explains the difference between a billing system and a costing system for a service firm?

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

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

A professional audit firm charged juniors at $50 per hour,seniors at $200 per hour and the overhead rate for both was 100 per cent on direct labour.The firm added 5 per cent on total cost to arrive at a fee to be charged.If a job took 10 junior hours and 2 senior hours,what was the total cost?

Which of the following does the value chain for a service shop include? i.Design ii.Customer support iii.Purchasing iv.Production/delivery

Which of the following is NOT a description of a mass service provider?

Which of the following cost classifications do not apply to service organisations? i.Direct/indirect ii.Fixed/variable iii.Production/non-production iv.Controllable/uncontrollable

Which of the following correctly describes the way firms would set their chargeout rates per billable hour?

Hybrid costing of services is appropriate where: i.there is significant front office involvement ii.equipment is a key input iii.there is no discretion in service production iv.there is a very low number of services produced

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

The realisation rate for a firm equals:

Which type of costing for their services are mass service entities likely to use?

Which of the following statements best completes the following sentence? 'A realisation rate below 100 per cent indicates that the firm …'