Normal Costing Uses

question 26

Multiple Choice

Normal costing uses

• A)actual costs for direct materials, direct labour and variable and fixed overhead.
• B)actual costs for direct materials, and direct labour, and a predetermined overhead rate for allocating variable and fixed overhead costs to production units.
• C)actual costs for direct materials, direct labour and variable overhead, and a predetermined overhead rate for fixed overhead.
• D)variable costing for direct materials, direct labour and variable overhead and a predetermined overhead rate for fixed overhead.

---

Definitions:

Variable

An element, feature, or factor that is likely to vary or change; in scientific experiments, this is the factor being tested or measured.

Product Cost

Product cost refers to the total expenditure incurred to create a product, including direct materials, direct labor, and manufacturing overhead.

Period Cost

Expenses on a company's income statement that are not directly tied to the production of goods or services and are expensed in the period they are incurred.

Manufactured Products

Items that have undergone a manufacturing process, transforming raw materials into finished goods for sale.