Normal Costing: Definition, Example & Formula


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question 1 of 3

Pete uses number of pizzas cooked as his allocation base for normal costing. His budgeted overhead expense is $100,000 and he is budgeted to cook 25,000 pizzas. What is his standard overhead rate for each pizza cooked?

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1. Which of these is an advantage to using normal costing?

2. A manufacturing facility used $10,000 in direct materials and $2,000 in direct labor expense for a production run. 100 direct labor hours were worked. Overhead is allocated at a rate of $5.00 per hour worked. What is the cost of this production run using normal costing?

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About This Quiz & Worksheet

The quiz/worksheet combo helps you check your knowledge of normal costing. The meaning of this term and its formula are topics on the quiz.

Quiz & Worksheet Goals

You can see how much you know about:

  • An advantage to using normal costing
  • Calculating standard overhead rate
  • Using the normal costing formula
  • A disadvantage of using normal costing

Skills Practiced

  • Knowledge application - use your knowledge to answer questions about the pros and cons of normal costing
  • Reading comprehension - ensure that you draw the most important information from the lesson on normal costing
  • Information recall - access the knowledge you have gained about how to use the normal costing formula

Additional Learning

You can review more about this type of costing by using the lesson, Normal Costing: Definition, Example & Formula. Use this lesson to:

  • Consider the three main aspects of vehicle assembly costing
  • Identify the formula for standard rate
  • Examine the purpose of the normal costing method