Question

Which of the following is the assignment process used with normal costing?

a.Actual direct materials, actual direct labor and actual overhead cost are assigned to products.
b.Actual direct labor cost is assigned to products, but direct material and overhead costs are assigned using predetermined rates.
c.Actual direct material and direct labor costs are assigned to products, but overhead costs are assigned using predetermined rates.
d.Actual direct materials cost is assigned to products, but direct labor and overhead costs are assigned using predetermined rates.
e.All of these manufacturing costs are assigned using predetermined rates.

Answer 1

The correct answer is c. Actual direct material and direct labor costs are assigned to products, but overhead costs are assigned using predetermined rates.

Step-by-step explanation:

In normal costing, costs accumulate as they are incurred, with one exception: indirect manufacturing costs are applied to production based on actual inputs (hours, units) multiplied by a predetermined cost application rate indirect manufacturing. This procedure is necessary because indirect manufacturing costs are not incurred uniformly over a period: therefore, estimates must be made and a fee must be generated to apply indirect manufacturing costs to work orders or departments as they occur. the units.