For Normal Costing, Even Though the Indirect-Cost Rate Is Based

question 133

True/False

For normal costing, even though the indirect-cost rate is based on actual, indirect costs are allocated to products based on the normal capacity of the cost-allocation base.

---

Definitions:

Intra-Entity Transactions

Transactions that occur between entities within the same parent company, which may need to be eliminated in consolidated financial statements.

Straight-Line Deprecation

A method of calculating the depreciation of an asset, where the cost is evenly spread over its useful life.

Intra-Entity Transfer

Refers to the movement of goods, services, or funds between different departments or units of the same organization.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against an asset, reflecting its reduction in value over time.