Answered: It is ridiculous to suggest that…

It is ridiculous to suggest that process costing may also be suited to service firms, as services cannot be replicated in the same way that manufacturing processes can be

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter14: Quality And Environmental Cost Management

Section: Chapter Questions

Problem 6DQ: Explain why external failure costs can be more devastating to a firm than internal failure costs.

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Concept explainers

Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit. Overhead expenses depend upon the nature of the business operations.

Question

Discuss the following statement: ‘It is ridiculous to suggest that process costing
may also be suited to service firms, as services cannot be replicated in the same way
that manufacturing processes can be

Definition Definition Operation costing method employed to determine the value of a product at each process or stage of the production process, applicable where goods produced from a series of continuous operations or procedure. Process costing is employed by businesses that manufacture goods and where production is in repetitive inflow.

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