A service company has the following costs. a. Direct Materials
b. Overhead cost
c. Product Cost
d. Expensed in the period incurred.

1. True
b. False

True

Explanation:

Service companies are those that offer an intangible good so to speak. They work by performing acts for their customers that are payable.

Direct materials are a cost in service companies because they have to pay for the materials needed to perform their jobs such as the hair products a barber would use on their clients.

Overhead costs are also incurred by Service companies for instance the cost of utilities in a barbing salon. Product cost is also incurred as these are costs related to offering the service.

And as the Accrual concept is in effect even for service companies, they have to expense their costs in the period it is incurred.

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