A costing system that charges jobs with actual direct costs and uses an estimated overhead allocation rate is called a(n):

Question

Quizplus · Accepted Answer

A normal costing system uses actual direct costs and estimated overhead allocation rates to charge jobs. It is a widely used costing system in manufacturing companies as it provides a closer approximation to the true cost of production. The other options are not appropriate as they use different costing methods. Actual costing system uses actual direct and indirect costs to charge jobs, process costing system is used for mass production of identical products and activity-based costing system allocates costs based on different activities or processes involved in production.

A Costing System That Charges Jobs with Actual Direct Costs