Toshiba Corporation makes computer chips. Toshiba Corporation would be classified as a

21) In the United States, the fastest growing type of company is
A) merchandising.
B) service.
C) manufacturing.
D) none of the above.
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


22) Which of the following is a characteristic of a service company?
A) Service companies make a product.
B) Service companies have a single category of inventory.
C) Service companies generally have no tangible products to sell.
D) Service companies transform raw materials into finished goods.
Answer:  C
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

23) A snow removal business would be classified as a
A) manufacturing company.
B) merchandising company.
C) simple company.
D) service company.
Answer:  D
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
24) An accounting firm would be classified as a
A) manufacturing company.
B) merchandising company.
C) simple company.
D) service company.
Answer:  D
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


25) Toshiba Corporation makes computer chips. Toshiba Corporation would be classified as a
A) merchandising company.
B) manufacturing company.
C) service company.
D) simple company.
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

26) Which type of company has three types of inventory?
A) A manufacturing company
B) A merchandising company
C) A service company
D) All of these companies
Answer:  A
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
27) For a ________, inventory consists of freight-in and the cost of the product which is to be resold.
A) service company
B) manufacturing company
C) merchandising company
D) all of these companies
Answer:  C
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


28) A ________ company has the highest percentage of labor costs as compared to the other types of companies.
A) merchandising
B) service
C) manufacturing
D) All companies have a high percentage of labor costs.
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

29) Which type(s) of companies prepare income statements and balance sheets?
A) Service company
B) Merchandising company
C) Manufacturing company
D) All of these types of companies
Answer:  D
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
30) All of the following items would be found in raw materials inventory for a furniture manufacturer except
A) wood.
B) fabric.
C) steel framing.
D) assembly worker wages.
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