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Normal Costing vs. Actual Costing

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question 1 of 3

What is an advantage of normal costing over actual costing?

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1. If the direct materials on a product are $200, the direct labor is 5 hours at $25 per hour, and the overhead allocation rate is $10 per labor hour, what is the actual cost of the product?

2. If the direct materials on a product are $150, the direct labor is 3 hours at $20 per hour and the budget overhead allocation rate is $7 per labor hour what is the normal cost of the product?

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About This Quiz & Worksheet

The quiz/worksheet combo aids in checking your understanding of normal costing vs. actual costing. An advantage of normal costing and finding both types of costing in examples are topics you'll see on the quiz.

Quiz & Worksheet Goals

Take the quiz whenever you want to see how much you know about:

  • Type of costing that's used when preparing financial statements
  • An advantage of normal costing over actual costing
  • Calculating the budgeted overhead allocation rate
  • Finding the normal cost

Skills Practiced

  • Information recall - access the knowledge you have gained about finding the actual cost
  • Reading comprehension - ensure that you draw the most important details from the lesson on normal costing vs. actual costing
  • Interpreting information - verify that you can read information about why you would choose normal costing over actual costing and interpret it correctly

Additional Learning

Access the lesson called Normal Costing vs. Actual Costing so you can learn more about the following topics:

  • The meaning of direct labor cost
  • Differences between normal costing and actual costing
  • Shortcomings of actual costing
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