Counting Spoiled Units as Part of Output Units in a Process-Costing

question 34

True/False

Counting spoiled units as part of output units in a process-costing system usually results in a higher cost per unit.

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Definitions:

Standard Direct Labor Cost

The predetermined cost of labor assigned directly to the production of goods, based on estimated time and wage rates.

Total Overhead Variance

The difference between the actual overhead incurred and the overhead allocated to production over a period.

Sales Price Variance

The difference between the actual selling price and the expected selling price of a product multiplied by the number of units sold.

Average Price

The mean cost of a commodity or service computed by dividing the total cost of all units purchased by the number of units.