When Determining the Full Cost of a Cost Object

question 5

Multiple Choice

When determining the full cost of a cost object:

• A) indirect costs are not allocated.
• B) none of the options are correct.
• C) the indirect costs need to be allocated to the cost object on the basis of its usage of a chosen cost driver or drivers.
• D) non-manufacturing costs are always expensed in the current period.

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Definitions:

Labor Hours

The total number of hours worked by employees within a specific time period, often used to measure productivity or to calculate labor costs.

Production Department

A division within a company responsible for the actual manufacturing or creation of goods and services.

Labor Constraint

Restrictions or limitations on the availability or use of workers that can affect production or service delivery.

Linear Optimization

A mathematical method for determining the best allocation of limited resources to achieve maximum profit or minimum cost, under a set of linear relationships.