Question
Requirement 4. Why might managers at Destin Products prefer to use normal costing? (Choose all that apply.) A. Normal costing enables Destin Products to use
Requirement 4. Why might managers at Destin Products prefer to use normal costing? (Choose all that apply.)
A. Normal costing enables Destin Products to use the budgeted manufacturing overhead rate determined at the beginning of the year to estimate the cost of a job as soon as the job is completed. Managers want to know job costs for ongoing uses, including pricing jobs, monitoring and managing costs, evaluating the success of the job, learning about what did and did not work, bidding on new jobs, and preparing interim financial statements.
B. Manufacturing costs of a job are available much earlier in a normal costing system. Consequently, Destin's manufacturing and sales managers can evaluate the profitability of different jobs, the efficiency with which the jobs are done, and the pricing of different jobs as soon as they are completed, while the experience is still fresh in everyone's mind.
C. Normal costing allows managers to allocate overhead costs at the end of the accounting year. This allows Destin Products to use the normal costs incurred to provide an accurate costing method so that adjustments will not need to be made at the end of the accounting year.
D. Normal costing provides managers with information at the end of a fiscal year when they know actual manufacturing overhead costs. This approach is preferable to managers to improve the company's spending efficiency and increase overall profits.
E. Normal costing provides managers with information earlier-while there is still time to take corrective actions, such as improving the company's labor efficiency or reducing the company's overhead costs.
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