manufacturing firms versus service firms
manufacturing involves combining direct materials, direct labor, and overhead to produce a new product. the good produced is tangible and can be inventory and transported from the from the plant to customer. a service is characterized by its intangible nature. it is not separable from the customer and cannot be inventory. traditional cost accounting has emphasized manufacturing and virtually ignored services. now, more than ever, that approach will not do. our economy has become increasingly service oriented. mangers must be able to track the costs of services rendered just as precisely as they track the costs of goods manufacturing. in fact , a company controller may find it necessary to cost both goods and services as mangers take an internal customer approach