Question

When using normal costing, the total production cost of a job is composed of:

(A) direct material and direct labor.
(B) direct material, direct labor, manufacturing overhead, and outlays for selling costs.
(C) direct material, direct labor, manufacturing overhead, and outlays for both selling and administrative costs.
(D) direct material, direct labor, and applied manufacturing overhead.
(E) direct material, direct labor, and actual manufacturing overhead.

Answer 1

The correct answer is letter "B": direct material, direct labor, and applied manufacturing overhead.

Step-by-step explanation:

Normal costing is the method of assigning the intrinsic costs of production to the products being manufactured. Essentially, these are raw materials and labor costs. In terms of cost accounting, they are allocated per unit as direct materials and direct labor. Also, normal costing involves overhead production, which applies to manufacture costs that are not easy to track, such as depreciation, rent or utilities.

Thus, normal costing is composed of direct materials, direct costs, and manufacturing overhead.

Answer 2

The correct answer is D

Step-by-step explanation:

Giving the following information:

(A) direct material and direct labor.

(B) direct material, direct labor, manufacturing overhead, and outlays for selling costs.

(C) direct material, direct labor, manufacturing overhead, and outlays for both selling and administrative costs.

(D) direct material, direct labor, and applied manufacturing overhead.

(E) direct material, direct labor, and actual manufacturing overhead.

Production costs= direct materials + direct labor + allocated manufacturing overhead