The ______________________ Method of Assigning Costs to Inventory and Cost

question 161

Short Answer

The ______________________ method of assigning costs to inventory and cost of goods sold is usually only practical for companies with expensive, custom-made inventory.

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Definitions:

Machine-Hours

A measure of production output or activity in terms of the total hours that machines are operated within a specific period.

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead costs to products or job orders, calculated before the production period based on estimated costs.

Labor-Hours

Labor-hours amount to the total time workers spend on production or service delivery, an important factor in determining labor efficiency and cost control.

Variable Manufacturing Overhead

Costs that vary with the level of production output, such as supplies and indirect labor expenses, not directly tied to the production volume.