Service companies must carry a large amount of inventory to meet consumer demand.

1) Service companies must carry a large amount of inventory to meet consumer demand.

Answer:  FALSE

Diff: 1

LO:  2-1

EOC:  E2-1

AACSB:  Reflective Thinking

Learning Outcome:  Define and use cost-volume-profit analysis to analyze the effects of changes

in costs and volume on a company's profits



2) Manufacturing companies usually have three types of inventory.

Answer:  TRUE

Diff: 1

LO:  2-1

EOC:  E2-1

AACSB:  Reflective Thinking

Learning Outcome:  Define and use cost-volume-profit analysis to analyze the effects of changes

in costs and volume on a company's profits



3) Retailers sell their products to consumers.

Answer:  TRUE

Diff: 1

LO:  2-1

EOC:  E2-1

AACSB:  Reflective Thinking

Learning Outcome:  Define and use cost-volume-profit analysis to analyze the effects of changes

in costs and volume on a company's profits



4) Merchandising companies include both wholesalers and retailers.

Answer:  TRUE

Diff: 1

LO:  2-1

EOC:  S2-1

AACSB:  Reflective Thinking

Learning Outcome:  Define and use cost-volume-profit analysis to analyze the effects of changes

in costs and volume on a company's profits



5) All companies have the same types of inventories.

Answer:  FALSE

Diff: 1

LO:  2-1

EOC:  S2-2

AACSB:  Reflective Thinking

Learning Outcome:  Define and use cost-volume-profit analysis to analyze the effects of changes

in costs and volume on a company's profits

6) Only manufacturing companies have finished goods inventory.

Answer:  TRUE

Diff: 2

LO:  2-1

EOC:  S2-2

AACSB:  Reflective Thinking

Learning Outcome:  Define and use cost-volume-profit analysis to analyze the effects of changes

in costs and volume on a company's profits



7) Which of the following are merchandising companies?

A) Manufacturers

B) Retailers

C) Wholesalers

D) Both retailers and wholesalers

Answer:  D

Diff: 1

LO:  2-1

EOC:  E2-15A

AACSB:  Analytical Thinking

Learning Outcome:  Define and use cost-volume-profit analysis to analyze the effects of changes

in costs and volume on a company's profits



8) Which of the following types of companies has raw materials, work in process and finished goods inventory?

A) Retailers

B) Manufacturers

C) Wholesalers

D) Service companies

Answer:  B

Diff: 1

LO:  2-1

EOC:  S2-2

AACSB:  Reflective Thinking

Learning Outcome:  Define and use cost-volume-profit analysis to analyze the effects of changes

in costs and volume on a company's profits



9) Which type of company makes up the largest sector of the United States economy?

A) Manufacturers

B) Merchandising

C) Wholesalers

D) Service companies

Answer:  D

Diff: 1

LO:  2-1

EOC:  S2-2

AACSB:  Reflective Thinking

Learning Outcome:  Define and use cost-volume-profit analysis to analyze the effects of changes

in costs and volume on a company's profits

10) The balance sheet of a service company has

A) raw materials inventory.

B) little or no inventory.

C) three categories of inventory.

D) two categories of inventory.

Answer:  B

Diff: 1

LO:  2-1

EOC:  S2-1

AACSB:  Reflective Thinking

Learning Outcome:  Define and use cost-volume-profit analysis to analyze the effects of changes

in costs and volume on a company's profits