Cost Distortion Occurs When Some Products Are Over Costed While

question 107

True/False

Cost distortion occurs when some products are over costed while other products are undercoated by the cost allocation system.

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Definitions:

Cost Per Unit

The total expense involved in creating a product, divided by the number of units produced, giving a per-unit cost.

Journal Entries

Recorded transactions in a company's general ledger, showing accounts affected and amounts, to maintain accurate financial records.

Process Cost System

An accounting system used in manufacturing where costs are assigned to batches or processes, suitable for homogeneous products.

Work In Process

Work in process (WIP) refers to the materials and goods that are in the production process but have not yet been completed.