Question

Which of the following would give the most accurate cost per unit (leaving the least amount of variances at the end of the year)?

		A. Variation of Normal Costing
		B. Actual Costing
		C. Normal Costing
		D. Standard Costing

Answer 1

Correct Answer is Standard Costing.

Lets us discuss other options are incorrect but why and D is why correct.

a. Variation of Normal Costing: Normal Costing as we normally accounted in the books. Their are few variations in accounting.

b. Actual Costing: on the which basis we actually prepare the books of accounts in cost. That what are actually Material used and sold out. all items taken on Actual Basis.

c. Normal Costing: Taking not actual methods of costing. it can e easily understood with an example. for example, We prepare schedule for study for 10 hours daily, But Actual We studied 8 hours only, and Normal time of study is 6 hours daily. Thus 6 hours daily will be Normal time, and with this time normal costing will be done.

d. Standard Costing: Standard Costing is the variation of actual costing with Normal costing. thus Mainly variations are commonly seen in this costing. If any variations are find out then find out the necessary solutions of variations that how to remove that. thus variations are seen in each stage of process and correct them.