1. Service department costs must be allocated to revenue-producing departments in order to:

a. determine the proper value of services provided.

b. assist in determining the profitability of services provided.

c. provide managers with information to assist in planning and control.

d. do all of the above.

2. The use of statistical process control in a service industry:

a. is not possible, since services do not result in the fixed, measurable activities on which statistical process control is based.

b. is impractical, since the outcome of services cannot be measured on a control chart.

c. can be an effective management tool.

d. will not reveal common cause exceptions.

3. Which of the following reflects a similarity between manufacturing and service companies in the use of accounting information?

a. Both manufacturing companies and service companies use accounting information to value inventories.

b. Both manufacturing companies and service companies can utilize just-in-time theories to control inventory purchases.

c. Both manufacturing companies and service companies utilize processes that require accounting information to analyze and control.

d. There are no similarities between manufacturing and service companies.

4. The allocation of service department costs to revenue-producing departments is necessary:

a. only in service organizations.

b. to accurately reflect the total cost of providing a particular product or service.

c. unless reciprocal service relationships exist.

d. only in manufacturing organizations.

5. The basic difference between a service department and an operating department is that:

a. operating departments can have no reciprocal relationships with other departments.

b. service departments have no identifiable customers.

c. operating departments generate revenues, whereas service departments do not.

d. service departments are not essential to the organization's product or service.
6. Which of the following would not be considered a service organization?

a. A mortuary

b. An airline company

c. An advertising agency

d. All of the above are service organizations.
7. In order for services to be delivered in a more efficient and cost-effective manner:

a. service managers must receive information regarding process outcomes.

b. interrelated services must be evaluated in order to improve quality.

c. the critical service path must be identified by service providers.

d. All of the above are true.