Question

When is a volume-based cost system appropriate for a service company?

A) A volume-based cost system is always appropriate for a service company.
B) A volume-based cost system is appropriate for a service company when every customer places a similar demand on the company's resources.
C) A volume-based cost system is appropriate for a service company when certain customers require more attention and a higher level of service than other customers.
D) A volume-based cost system is never appropriate for a service company.

Answer 1

A volume-based cost system is appropriate for a service company when every customer places a similar demand on the company's resources.

Step-by-step explanation:

A volume-based cost system is appropriate for a service company when every customer places a similar demand on the company's resources. This means that the company's costs are directly related to the number of customers served or the volume of services provided. In this case, the company can allocate its costs based on the volume of services offered, allowing it to analyze and manage its costs more effectively.