The Weighted Average Method

question 108

Multiple Choice

The weighted average method:

• A) Considers only this period's costs and work
• B) Includes beginning WIP costs in the equivalent unit cost calculations
• C) Uses standard costs to allocate cost to units
• D) Excludes ending WIP units and costs

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Definitions:

Budgeted Capacity

The amount of production or activity level planned for a future period, based on budget allocations.

Practical Capacity

The maximum amount of work or output that can be realistically achieved in a specific period under normal operating conditions.

Cost Allocation

The process of assigning indirect costs to different departments, products, or projects based on relevant distribution bases.

Cost Pool

A grouping of individual costs, typically by department or service center, from which cost allocations are made.