Final answer:
Direct costs are not traced the same way in both actual costing and normal costing, which makes the statement false. Actual costing uses actual costs while normal costing applies overhead using a predetermined rate.
Step-by-step explanation:
The statement that direct costs are traced the same way for actual costing and normal costing is false. In actual costing, the actual costs of direct materials, direct labor, and overhead are used to determine product costs. In contrast, normal costing uses the actual direct materials and direct labor costs but applies overhead using a predetermined rate based on estimated costs rather than actual costs. This approach can result in differences in how overhead costs are assigned to products.
Understanding the distinctions between fixed and variable costs is crucial for businesses, as it affects pricing and profitability. For instance, the marginal cost of the first unit of output is regarded as the same as the total cost if there are no fixed costs to account for at that production level. Fixed costs do not change with production volume, whereas variable costs do. This impacts the calculation of average total cost and average variable cost across different levels of production.