The establishment of predetermined conversion costs for operation costing requires which of the following.
i. Budgeted level of the cost driver
ii. Budgeted direct labour costs
iii. Budgeted manufacturing overhead costs
A) i
B) i and ii
C) i, ii and iii
D) i and iii

Question

Quizplus · Accepted Answer

Operation costing requires a budgeted level of the cost driver, budgeted direct labor costs, and budgeted manufacturing overhead costs to establish predetermined conversion costs. This approach combines elements of both job costing and process costing, requiring comprehensive budgeting for accurate cost allocation.

The Establishment of Predetermined Conversion Costs for Operation Costing Requires