Question

Debits to the Manufacturing Overhead account record:

The actual amounts of overhead costs incurred during a period.
The amount of overhead applied to production during a period.
The amount of overhead incurred on a specific job.
All conversion costs of a period.
Which of the following costing systems would always use job cost sheets?

a. Job order costing.
b. Process costing.
c. Activity-based costing.
d. All three systems.

Answer 1

Answer: Option C : ACTIVITY-BASED COSTING

Explanation:

ACTIVITY-BASED COSTING is a type of costing that assigns indirect cost and overhead cost to related products and services. It shows the relationship between manufactured products and overhead tasks.

Other options like job order costing is only used when costs and production specification are not identical for product or customer but the direct cost of labour can be traced to the final product. Also

Process costing is deployed when a process is used to manufacture identical products and the direct material, direct labor, and manufacturing overhead cannot be easily or economically traced to a specific unit.

From the above it shows that the ACTIVITY-BASED COSTING is best used in this case from definition