Asked by oluwatosin babalola on May 05, 2024
Verified
An activity-based costing that is designed for internal decision making may not confor? to generally accepted accounting principles. Which of the following would cause that to be the case?
A) Direct manufacturing costs for labour and material are included.
B) Indirect manufacturing costs for indirect labour are included.
C) Some non-manufacturing costs are assigned to products.
D) Indirect manufacturing costs for indirect materials are included.
Generally Accepted Accounting Principles
A collection of commonly-followed accounting rules and standards for financial reporting.
Non-Manufacturing Costs
Expenses that are not directly related to the production of goods, including selling, general, and administrative expenses.
- Differentiate between different types of costs in ABC including direct, indirect, manufacturing, and non-manufacturing costs.
Verified Answer
JR
jessica remorenkoMay 12, 2024
Final Answer :
C
Explanation :
Generally accepted accounting principles require that only product costs (direct materials, direct labor, and manufacturing overhead) be included in inventory valuations and cost of goods sold calculations. However, ABC systems for internal decision-making purposes may include additional costs such as non-manufacturing costs (e.g. sales and marketing expenses) which are not considered product costs under GAAP.
Learning Objectives
- Differentiate between different types of costs in ABC including direct, indirect, manufacturing, and non-manufacturing costs.