Question

A service company has which of the following costs.

a. Direct materials
b. Overhead costs
c. Product costs
d. Expensed in the period incurred

Answer 1

Answer:

b. overhead costs

Explanation:

A service company is one that creates revenue by offering services rather than vending physical products.

Overhead costs are business costs that cater to the day to day running of the business. In the case of a service company, overhead costs are usually fixed and the include some of the following:

1. Utilities
2. Travel
3. Advertising
4. Office supplies
5. Advertising cost
6. Salaries