Question

One of the main differences between service companies and manufacturers is that:

multiple choice
a.Service firms have raw materials, but manufacturers do not.
b.Service firms do not have raw materials, but manufacturers do.
c.Service firms normally use direct materials to apply overhead.
d.Service firms normally use the same account titles as a manufacturer.

Answer 1

Service firms do not require raw materials for their operations, unlike manufacturers that transform raw materials into finished products.

Step-by-step explanation:

One of the main differences between service companies and manufacturers is that service firms do not have raw materials, but manufacturers do. Service companies provide intangible products, such as consulting or repair services, which do not require the transformation of raw materials into finished goods.

On the other hand, manufacturers typically produce tangible products, which involves the conversion of raw materials through various processes in a factory setting. This conversion process often includes adding value to the raw materials by altering their form or combining them with other materials to create a new product that has a higher value to consumers.