Managerial Accounting, 3e (Braun/Tietz)
Chapter 2 Building Blocks of Managerial Accounting

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