Which of the Following Statements About Normal Costing Is True

question 9

Multiple Choice

Which of the following statements about normal costing is true?

• A) Direct costs and indirect costs are traced using an actual rate.
• B) Direct costs and indirect costs are traced using budgeted rates.
• C) Direct costs are traced using a budgeted rate, and indirect costs are allocated using an actual rate.
• D) Direct costs are traced using an actual rate, and indirect costs are allocated using a budgeted rate.

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Definitions:

Total Utility

The complete fulfillment derived from the consumption of a specific amount of products or services.

Utility-Maximizing

The economic principle where individuals or entities choose to allocate their resources in a way that maximizes their satisfaction or utility.

Marginal Utility-To-Price Ratio

A measure of the additional satisfaction gained from consuming one more unit of a good or service relative to its cost.

Consumer Choice

The decision-making process by which individuals select and consume products or services to satisfy their desires and needs.