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Managerial Accounting Tutorial Questions Chapter 2 *2.3 What is the most important difference between a manufacturing firm and a service industry firm, with regard to the classification of costs as product *costs or period costs? The most important difference between a manufacturing firm and a service industry firm is that most services are consumed as they are produced. Services cannot be stored and kept like manufactured goods. Product costs are costs associated with goods for sale until when the products are sold, the costs become expenses. Period costs are costs that are expensed during the time period in which they are incurred. Product costs are usually associated with manufacturing firms, as product costs are costs of inventory that can be stored such as books and pencils, while Period costs are associated with Service industry firms as period costs are costs of services. 2.7 Explain why an overtime premium is included in manufacturing overhead An overtime premium is a bonus given to an employee who works over the time normally scheduled. A manufacturing overhead are all the other costs of manufacturing. It includes indirect material, indirect labor, and other manufacturing costs. Fixed cost per unit changes when the level of activity increases because as total fixed cost stays the same, and the level of activity increases, the fixed cost for each unit decreases.. *2.16 List three costs that are likely to be controllable by a city’s airport manager. List three costs that are likely to be uncontrollable *by the manager One cost that is likely to be controllable by a city’s airport manager is direct costs, which is the cost that can ...