Question

Which of the following statements is false? a.In normal costing, actual overhead costs always enter the work-in-process account. b.The use of normal costing means that overhead is applied to each job using a predetermined rate. c.Indirect labor is part of overhead. d.In normal costing, the cost of a job includes direct materials, direct labor, and applied overhead. e.None of these choices are false.

Answer 1

Answer:

a.In normal costing, actual overhead costs always enter the work-in-process account

Explanation:

As we use an applied overhead rate this will most probably be diferent than actual overhead as it is calculated based on expected overhead cost and expected cost driver amount.

Therefore, difference will arise and there will be under or overapplication of facotry overhead.

Answer 2

Answer:

A) In normal costing, actual overhead costs always enter the work-in-process account.

Explanation:

When a manufacturer uses the normal costing method, the actual overhead costs are not assigned directly to jobs. Normal costing allocates costs to product output based on direct materials, direct labor and standard (or predetermined) overhead costs that are allocated based on direct labor or machine hours used.