hide or show questions progress:10/10 items question content areawhich of the following is true of normal costing? a.actual direct materials and direct labor costs are traced to products, but estimated overhead costs are assigned using predetermined rates. b.actual direct labor cost is traced to products, but estimated direct materials and estimated overhead costs are assigned using predetermined rates. c.actual direct materials cost is traced to products, but estimated direct labor and estimated overhead costs are assigned using predetermined rates. d.actual direct materials, actual direct labor, and actual overhead cost are assigned to products.

Answer

a) Actual direct materials and direct labor costs are traced to products, but estimated overhead costs are assigned using predetermined rates.

Q:What is normal costing? A:Normal costing is a cost accounting system in which direct materials, direct labor, and overhead costs are each assigned to products based on a predetermined rate.
Q:What are the options for the answer? A:The options are: a) Actual direct materials and direct labor costs are traced to products, but estimated overhead costs are assigned using predetermined rates. b) Actual direct labor cost is traced to products, but estimated direct materials and estimated overhead costs are assigned using predetermined rates. c) Actual direct materials cost is traced to products, but estimated direct labor and estimated overhead costs are assigned using predetermined rates. d) Actual direct materials, actual direct labor, and actual overhead cost are assigned to products.
A:The correct answer is option A, actual direct materials and direct labor costs are traced to products, but estimated overhead costs are assigned using predetermined rates. The predetermined overhead rate is calculated by dividing the estimated total overhead cost for the period by an estimated allocation base (such as direct labor hours or machine hours). The actual overhead cost is then allocated to products based on the predetermined overhead rate and the actual amount of the allocation base used by each product. This method allows for more accurate product costing.