Extended normal costing

Extended normal costing derives production costs by multiplying budgeted or standard costs by the number of actual units produced. This approach differs from normal costing, where the actual costs of direct materials and direct labor are assigned to the actual number of units produced. Since the extended method employs more estimates, the costing information it produces is less accurate than the normal costing method. The extended normal costing method is most commonly used in situations where it is difficult to assign actual costs to products.

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