One of the Primary Differences Between Actual and Normal Costing

question 121

True/False

One of the primary differences between actual and normal costing systems is their treatment of direct material and direct labor costs.

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Definitions:

Inferior Good

A type of good for which demand decreases as the income of consumers increases, unlike normal goods, where demand increases with rising income.

Demand Curves

Graphs that show the relationship between the price of a product and the quantity of the product demanded.

Income Effect

The change in an individual's or economy's consumption patterns due to a change in real income.

Substitution Effect

The change in consumption patterns due to a change in the relative prices of goods, holding the consumer's utility level constant.