How Are Costs Assigned in a Normal Cost System

question 165

Multiple Choice

How are costs assigned in a normal cost system?

• A) actual direct materials, actual direct labour, and actual manufacturing overhead
• B) actual direct materials, actual direct labour, and budgeted manufacturing overhead
• C) budgeted direct materials, actual direct labour, and standard manufacturing overhead
• D) budgeted direct materials, standard direct labour, and standard manufacturing overhead

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Definitions:

Ordinary Repairs

Routine maintenance and repair costs that are expensed in the period incurred to keep an asset in its normal operating condition.

Physically Extracted

The process of removing materials or resources from the natural environment through manual or mechanical means.

Act Of Nature

Events caused by natural forces that are beyond human control, like earthquakes, hurricanes, or floods, affecting businesses and individuals.

Depreciation Expense

An accounting method that allocates the cost of a tangible asset over its useful life, reflecting wear and tear or obsolescence.