In some service organizations,a variation from normal costing is helpful because actual direct labor costs,the larges component of total costs,can be difficult to trace to jobs as they are completed.

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Quizplus · Accepted Answer

This statement is true. In service organizations, direct labor costs can be difficult to trace to individual jobs, and therefore a variation from normal costing can be helpful. This method uses predetermined overhead rates based on estimated total costs, rather than actual direct labor costs, to allocate costs to jobs.

In Some Service Organizations,a Variation from Normal Costing Is Helpful