The costing, which explains how and when scrap affects the operating income of company is classified as ___________?
Correct answer: A. inventory costing
- A. inventory costing
- B. conversion costing
- C. normal scrap costing
- D. abnormal scrap costingHire An Accountant
Explanation
Inventory costing explains how scrap is recorded and when its proceeds or cost effect is recognized in operating income. Conversion costing concerns manufacturing costs, not the accounting treatment of scrap.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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