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Which of the following statements about actual costing and normal costing is true?

A) Manufacturing costs of a job are available earlier under actual costing.
B) Corrective actions can be implemented sooner under normal costing.
C) Manufacturing costs are available earlier under normal costing.
D) Both B and C are correct.

User Robbert
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1 Answer

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Final answer:

Manufacturing costs are available earlier with actual costing because it uses real purchase and labor records immediately after costs are incurred, making it quicker to analyze and take corrective actions if needed.

Step-by-step explanation:

The correct answer to the question of whether manufacturing costs of a job are available earlier under actual costing or normal costing, and if corrective actions can be implemented sooner under one of these costing methods, is that manufacturing costs of a job are available earlier under actual costing (A). In actual costing, actual costs are used to assign costs to products, and since these costs are based on genuine purchase and labor records, they are available immediately after costs are incurred. Therefore, manufacturing costs are known earlier than in normal costing, which uses predetermined overhead rates and may cause delays in obtaining final manufacturing costs for a job. This allows for quicker analysis and corrective actions if necessary.

User Ian Dickinson
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