Manufacturing costs are often organized in the general ledger by function and department. When...

Question:

Manufacturing costs are often organized in the general ledger by function and department. When applying activity-based costing, these manufacturing costs will be sorted by activities.

True

False

Managerial Accounting

Managerial accounting is considered as one of the branches of accounting. It is concerned with providing reliable accounting information to be used by managers to make decisions concerning the performance of a company. Cost accounting is treated as part of managerial accounting.

Answer and Explanation:

Answer: True

When reporting overheads costs in the general ledger, they can be organized in terms of the function of the costs in the manufacturing process. Also, overhead items can be sorted in terms of the department where such costs arise. Activity-based costing refers to the costing method where activities are identified and the cost each of the activity gets assigned or allocated to products. The cost is assigned on the basis of actual consumption of each activity. In the ledger, overhead costs can be reported by using activities.


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Managerial Accounting Functions

from Business Management: Help & Review

Chapter 9 / Lesson 1
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