Overview

Manufacturing involves combining direct materials, direct labor, and overhead to produce a new product. The good produced is tangible and can be inventoried and transported from the plant to the customer. A service is characterized by its intangible nature. It is not separable from the customer and cannot be inventoried. Traditional cost accounting has emphasized manufacturing and virtually ignored services. Now, more than ever, that approach will not do$.$ Our economy has become increasingly service oriented. Managers must be able to track the costs of services rendered just as precisely as they track the costs of goods manufactured. In fact, a company$$s controller may find it necessary to cost both goods and services as managers take an internal customer approach.

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Directions

ULOs Reflected ULOs $1,4,$ and $5$

Classify the following types of firms as either manufacturing or service. Explain the reasons for your choice in terms of the four features of service firms $($heterogeneity$,$ inseparability, intangibility, and perishability$).$

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Bicycle production $-$

Pharmaceuticals $-$

Income tax preparation $-$

Application of artificial nails $-$

Glue production $-$

Childcare $-$