The Appropriate Cost Accounting System to Use When Inventory Items

question 55

Multiple Choice

The appropriate cost accounting system to use when inventory items are produced on an assembly line is

• A) job-order costing.
• B) process costing.
• C) weighted average.
• D) perpetual method.

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Definitions:

Job-Order Costing

A cost allocation system used to assign production costs to individual products or batches, useful in manufacturing environments with customized orders.

Goods Sold

Refers to the products that have been sold and delivered to customers during a specific period.

Predetermined Overhead Rate

A rate used to apply manufacturing overhead to products, calculated at the beginning of the period based on estimated costs and activity levels.

Direct Labor-Hours

The total hours worked by employees who are directly involved in the manufacturing process or providing a service.