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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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In a normal costing system, the cost of a job includes

  1. a. actual direct materials, actual direct labor, and estimated (applied) overhead.
  2. b. estimated direct materials, estimated direct labor, and estimated overhead.
  3. c. actual direct materials, actual direct labor, actual overhead, and actual selling cost.
  4. d. actual direct materials, actual direct labor, and actual overhead.
  5. e. None of these. Job-order costing requires the use of actual, not normal, costing.

To determine

Identify the factors included in the cost of job in normal costing.

Explanation

Normal Costing:

Normal costing is a costing system, which determines the value of a unit by the total of actual direct materials, actual direct labor, and estimated overhead. The overheads are estimated at the beginning of the year in order to use them during the whole year.

a.

In normal costing system, the job cost includes actual direct materials, actual direct labor and estimated overhead. Therefore, option a is the correct answer.

b...

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