Using Normal Costing the Amount of Supervisory Salaries to Allocate

question 47

Multiple Choice

Using normal costing the amount of supervisory salaries to allocate is determined by calculating

• A) actual direct-cost rates times actual quantities of direct-cost inputs.
• B) actual indirect-cost rates times actual quantities of cost-allocation bases.
• C) actual direct-cost rates times budgeted quantities of input.
• D) budgeted indirect-cost rates times actual quantities of cost-allocation bases.
• E) none of the above.

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Definitions:

Joint Costs

Costs that are incurred in the process of producing two or more products or services simultaneously and are not readily assignable to individual products.

Inventory Valuation

The method used by businesses to assess the value of their inventory, taking into account the cost of acquiring or producing the goods and any market changes.

Profitability of Joint Products

The assessment of earnings from products that are produced simultaneously from the same process and cannot be distinguished cost-wise until a certain point of production.

Qualitative Factors

Qualitative factors are non-numeric variables or considerations that affect decision-making, such as company reputation or customer satisfaction.