A Key Difference Between the Periodic and Perpetual Inventory Systems

question 53

True/False

A key difference between the periodic and perpetual inventory systems is the timing of the calculation of cost of goods sold.

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Definitions:

Budget Variance

The difference between the actual fixed overhead costs and the budgeted fixed overhead costs for the period.

Applied

Refers to the process of allocating or assigning costs to a specific cost object in a manner that is consistent with the usage or benefits derived from it.

Denominator Activity Level

A term used in cost accounting to represent the total activity or volume that is used to allocate fixed costs to units of output.

Standard Cost System

A cost accounting system that uses cost units determined in advance for materials, labor, and overhead to estimate the cost of production.