Question

At the Snow Speciality Derma Clinic, each customer is required to pay a minimum cost of $40 in addition to the regular charges. This cost includes $25 for the person providing the services and $15 for the equipment used. This sum of $40 is referred to as the:a) marginal cost of a service.b) inventory cost of a service.c) social cost of a service.d) sunk cost of a service.e) opportunity cost of a service.

Answer 1

Answer:

B. Inventory cost of a service

Explanation:

Since the customer pays for the services provided by the Snow Speciality Derma Clinic, the amount paid is for the services provided by the entity.

This kind of business is a service provider. Normally, their equivalent inventories are measured by the services provided by the entity to its customers.

Since services are being provided, those costs are consisting of labor services and other costs provided by the personnel that are engaging in providing such services for the customers.

The company will eventually record and analyze its costs depending on the equivalent amount of all services provided and used in operating the business. By the end of the accounting period, the company will record its revenue based on the total services provided.