Multiple Choice
Since service firms do not produce inventory, they should focus primarily on:
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4. Merchandising Operations
Service Company vs. Merchandising Company
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Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
Omega Construction manufactures homes to customer specifications. It most likely uses:
A
Process costing system
B
Periodic inventory system
C
Job order costing system
D
Perpetual inventory system
Verified step by step guidance1
Understand the nature of Omega Construction's business: Omega Construction manufactures homes to customer specifications, which means each project is unique and tailored to individual customer requirements.
Identify the appropriate costing system: A job order costing system is used when products or services are customized, as it allows tracking costs for each specific job or project. This is suitable for Omega Construction since each home is built to customer specifications.
Differentiate between inventory systems: A perpetual inventory system continuously updates inventory records for purchases and sales, while a periodic inventory system updates records at specific intervals. For a manufacturing company like Omega Construction, a perpetual inventory system is typically preferred as it provides real-time tracking of materials and finished goods.
Match the correct options to the business model: Based on the analysis, Omega Construction most likely uses a job order costing system for tracking costs and a perpetual inventory system for managing inventory.
Review the reasoning: Ensure the selection aligns with the company's operations, emphasizing the customization of homes and the need for accurate, real-time inventory tracking.
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