Max Inc Has Started a New System of Allocating Costs According

question 91

Multiple Choice

Max Inc. has started a new system of allocating costs according to what their employees do, rather than what the company spends. For example, labor expenses are allocated to employee tasks rather than salary and benefits. This practice is referred to as:

• A) cost accounting.
• B) accounting auditing.
• C) task accounting.
• D) activity-based costing.
• E) allocation costing.

---

Definitions:

Weighted-Average Method

A costing method where the cost of inventory items is determined based on the weighted average of the costs of similar items at the beginning of a period and the costs of items acquired during that period.

Work In Process

Units of product that are only partially complete.

Conversion Costs

Conversion costs represent the combined costs of direct labor and manufacturing overheads incurred to convert raw materials into finished goods.

Equivalent Unit

A measurement used in process costing to equate the work done on units in progress to a number of fully completed units.