Final answer:
The student's question is about the method of allocating direct costs to cost objects in actual costing. The correct answer is C) using the actual direct cost rates times the actual quantities of the direct-cost inputs. This method ensures precision in the cost accounting process.
Step-by-step explanation:
Actual costing is a costing system that allocates direct costs to cost objects by tracing them in an accurate way. This is done by using the actual direct cost rates times the actual quantities of the direct-cost inputs.
The correct answer to the student's question is C) using the actual direct cost rates times the actual quantities of the direct-cost inputs. This method ensures that the costing reflects the true amount spent on producing a specific item or providing a service. Unlike other methods that involve budgeted rates or quantities, actual costing takes into account what actually happened in terms of costs incurred and inputs used.
For example, if the actual cost of material per unit is $5 and the actual quantity used is 100 units, the total direct cost allocated to the cost object would be $5 x 100 = $500 under actual costing. This method is particularly useful for firms looking to have precise cost information for decision-making, pricing, and financial reporting.