Why is actual costing of overheads less accepted than normal costing? Actual costing is widely used in practice (a) and (b) only It is impossible to determine overheads per job until the end of the year It exacerbates the problem of under/over applied overheads Monthly allocation of actual overheads leads to unusually low or high product costs when monthly output differs from the annual average

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Hercules Hair Restorer Inc. (HHRI) makes many varieties of hair restoration products which are sold under well-known marketing labels. A single batch contains 10,000 8 oz. bottles and takes two days to make. Typically 15 batches are completed per month, for different brands. Basic cost data for the month of January appears below. Hair by Zeus Bottle Batch Cost per January's other expenses Oil, fl. oz. 2 $3 Supervision $8,000 Lotion, fl. oz. 4 $1 Indirect materials $2,200 Zeus potion, fl. oz. 1/4 $24 Equipment deprec & repairs $14,520 Alcemena scent 1/16 $48 Plant manager's salary $6,500 Bottle, cap, label 1 $0.4 Utilities $1,800 Direct labor, hour 50 $14 $33,020 Machine hours 8 Why is actual costing of overheads less accepted than normal costing? It is impossible to determine overheads per job until the end of the year Monthly allocation of actual overheads leads to unusually low or high product costs when monthly output differs from the annual average It exacerbates the problem of under/over applied overheads

Answer : Actual costing been less accepted is applicable to (a) and (b) only

Explanation:

A) Actual costing is less accepted here because actual costing can only be determined at the end of the year and not at the beginning or at some point along the production process

B)  Actual costing is less accepted because Monthly allocation of actual overheads leads to unusually low or high product costs when monthly output differs from the annual average.

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