Data from normal costing and standard costing are used in pricing and product-mix decisions.

Question

Quizplus · Accepted Answer

Both normal costing and standard costing provide information on the expected costs of producing goods or services, which can be used to make pricing and product-mix decisions. Normal costing uses actual costs for direct materials and direct labor, and estimates overhead costs based on a predetermined overhead rate. Standard costing uses predetermined costs for direct materials, direct labor, and overhead, based on the company's standards or benchmarks. Both methods can be useful in determining the cost of producing a product or service, and can inform decisions about pricing, product design, and production process improvements.

Data from Normal Costing and Standard Costing Are Used in Pricing