Asked by Rebekah Gonzalez on May 11, 2024
Verified
In activity-based costing, unit product costs computed for external financial reports include manufacturing overhead costs that are computed by multiplying activity rates by the activities required to produce a product.
Unit Product Costs
The total cost (both variable and fixed) associated with producing a unit of product.
Manufacturing Overhead Costs
Manufacturing Overhead Costs include indirect expenses related to manufacturing, such as utilities, maintenance, and factory management salaries, that are not directly tied to specific units of production.
Activity Rates
These are costs assigned to cost objects based on the activities those objects require, often used in activity-based costing.
- Understand the difference in unit product costs calculation for external financial reports under activity-based costing.
Verified Answer
JM
jason mcelyeaMay 14, 2024
Final Answer :
True
Explanation :
In activity-based costing, unit product costs are computed by assigning overhead costs to individual products based on the activities required to produce them. Activity rates are multiplied by the number of units of each activity used to produce a product, and this results in the overhead cost to be assigned to the product. These costs are included in the unit product cost for external financial reports.
Learning Objectives
- Understand the difference in unit product costs calculation for external financial reports under activity-based costing.