Which of the Following Statements About Normal Costing Is True

question 9

Multiple Choice

Which of the following statements about normal costing is true?

• A) Direct costs and indirect costs are traced using an actual rate.
• B) Direct costs and indirect costs are traced using budgeted rates.
• C) Direct costs are traced using a budgeted rate, and indirect costs are allocated using an actual rate.
• D) Direct costs are traced using an actual rate, and indirect costs are allocated using a budgeted rate.

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Definitions:

Reorganization

A comprehensive restructuring of a company's business, legal, or ownership structure, often aimed at improving profitability or efficiency.

Interest Earned

The income received from investments in securities such as savings accounts, certificates of deposit (CDs), bonds, or loans.

Insolvent Company

A company that is unable to pay its debts as they come due, or whose liabilities exceed its assets in value.