Distinguish between actual costing and normal costing. A. Actual costing and normal costing differ in their use of actual or budgeted quantities of direct-cost inputs. B. Actual costing and normal costing differ in their use of actual or budgeted quantities of cost-allocation bases. C. Actual costing and normal costing differ in their use of actual or budgeted indirect-cost rates. D. Actual costing and normal costing differ in their use of actual or budgeted direct-cost rates.

Question

Claire Arroyo

Business

8 June, 10:27

Distinguish between actual costing and normal costing. A. Actual costing and normal costing differ in their use of actual or budgeted quantities of direct-cost inputs. B. Actual costing and normal costing differ in their use of actual or budgeted quantities of cost-allocation bases. C. Actual costing and normal costing differ in their use of actual or budgeted indirect-cost rates. D. Actual costing and normal costing differ in their use of actual or budgeted direct-cost rates.

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Answers (1)

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Stephen Kent · Answer 1

Answer: Option (C) is correct.

Explanation:

For calculating production costs, actual costing method uses the actual or real cost of the materials and labor that are the important factors of production for a firm, whereas on the other hand normal costing uses the indirect material and labor costs for estimating the cost of production.

So, these costs are differ in their utilization of indirect costs rates.