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During an accounting period, job costs are computed on an ongoing basis by the use of:

A) actual allocation rates
B) budgeted indirect-cost rates
C) overallocated indirect-cost rates
D) underallocated indirect-cost rates

1 Answer

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Final answer:

Job costs during an accounting period are primarily computed using budgeted indirect-cost rates, which allow for proactive cost management.

Step-by-step explanation:

During an accounting period, job costs are computed on an ongoing basis primarily by the use of budgeted indirect-cost rates. This method involves allocating indirect costs to specific jobs or products based on predetermined rates, rather than relying on actual costs incurred, which may vary and be known only after the fact. Calculating job cost using budgeted rates allows companies to estimate costs in advance and manage them more proactively during the accounting period.

Other types of costs, such as explicit and implicit costs, play a role in the overall picture of a company's financial status. Explicit costs are tangible, out-of-pocket expenses, such as wages and rent, while implicit costs include opportunity costs and the depreciation of goods and equipment. These costs contribute to the total cost calculation and business decisions in both the short and long term.

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