Part 1: Service organizations use standard costs. Describe what types of standards might be in effect at each of the following types of organizations:
• Hospitals • Law firms • Accounting firms • Auto repair shops • Fast-food restaurants
Part 2: For the types of service organizations listed above, should ideal standards or practical standards be implemented? What are the advantages and disadvantages of each? If you were an employee at one of these organizations, which would you prefer and why? Does your answer change if you are the manager in charge of production? Why or why not?
Sample Solution
