Question

Which of the following is not a benefit of the normal-costing system? Managers take corrective actions...

Which of the following is not a benefit of the normal-costing system?

Managers take corrective actions sooner.

Manufacturing costs of jobs are reported later.

Manufacturing costs of jobs are reported earlier.

Job pricing data is available soon after jobs are completed.
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Answer #1

Manufacturing costs of jobs are reported later.

Explanation:

normal costing provides managers with information earlier while there is still time to take corrective actions, such as improving the company's labor efficiency or reducing the company's overhead costs. Hence, option 1 is a benefit.

Also, manufacturing costs of a job are available much earlier in a normal costing system (manufacturing and sales managers can evaluate the profitability of different jobs, the efficiency with which the jobs are done, and the pricing of different jobs as soon as they are completed, while the experience is still fresh in everyone mind). Therefore, option 3 and 4 are also benefits.

This means that option 2 is not a benefit as manufacturing cost of jobs are not reported later but earlier as compared to other methods of costing.

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