Which of the following statements is incorrect? Multiple Choice External financial reporting requirements call for allocating manufacturing overhead to work-in-process inventory. Variable overhead is allocated on the basis of production expected to be achieved over a number of periods after taking planned maintenance into consideration (normal capacity). Over/underabsorbed overhead can be reported on the income statement or allocated among inventory accounts on the balance sheet. Proration of over/underabsorbed overhead is chosen when it will alter an investment decision. Firms involved in cost-plus projects will choose to recost each job because the firm’s revenue is tied to its costs.
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
