ECONOMICS

Detailed explanation-1: -Thus, the key point in an actual costing system is that it only uses actual costs incurred and allocation bases experienced; it does not incorporate any budgeted amounts or standards.

Detailed explanation-2: -What is normal costing? Normal costing is a standard cost system that accounts for materials, labor, and overhead when determining the cost of producing products.

Detailed explanation-3: -As their names indicate, direct material and direct labor costs are directly traceable to the products being manufactured. Manufacturing overhead, however, consists of indirect factory-related costs and as such must be divided up and allocated to each unit produced.

Detailed explanation-4: -Manufacturing overhead (MOH) cost is the sum of all the indirect costs which are incurred while manufacturing a product. It is added to the cost of the final product along with the direct material and direct labor costs.