Question: 1. Explain why knowledge of cost behavior is useful in product performance evaluation.
2. Explain why product costs are capitalized but period costs are expensed in the current accounting period.
3. Explain how business activities and inventories for a manufacturing company, a merchandising company, and a service company differ.
4. Why does managerial accounting often involve working with numerous predictions and estimates?
5. How do an income statement and a balance sheet for a manufacturing company and a merchandising company differ?