One of the Considerations in Choosing a Cost Determination Method

question 91

True/False

One of the considerations in choosing a cost determination method is to report an inventory cost on the balance sheet that is close to the inventory's recent costs.

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Definitions:

Overapplied Overhead

A situation where the allocated manufacturing overhead costs are more than the actual overhead costs incurred.

Variable Overhead Spending Variance

The difference between the actual variable overhead costs incurred and the expected costs based on standard costs.

Direct Labour Hour

The amount of time spent by workers directly manufacturing a product, which is used as a basis for allocating production costs in cost accounting.

Static Budget

A budget based on a set level of activity or volume that does not adjust over the period for actual activity levels.