The principal difficulty with normal costing is that
A)the unit cost information is not received on a timely basis.
B)it can result in fluctuating per-unit overhead costs.
C)estimated overhead and estimated activity are likely to differ from actual overhead and actual costs, resulting in underapplied or overapplied overhead.
D)there is no difficulty associated with using normal costing.

Question

Quizplus · Accepted Answer

Normal costing involves using estimated overhead and estimated activity level to allocate overhead costs to products or services. However, actual overhead and actual activity level may differ from the estimates, resulting in underapplied or overapplied overhead. This can create difficulties in accurately determining the true cost of goods or services produced.

The Principal Difficulty with Normal Costing Is That