In variable costing, costs are separated into the major categories of
A) manufacturing and non-manufacturing.
B) manufacturing and fixed.
C) fixed and variable.
D) variable and non-manufacturing.

Question

Quizplus · Accepted Answer

Variable costing separates costs into fixed and variable categories. This is because variable costing only considers the direct costs associated with producing a product or providing a service, while fixed costs, such as rent or salaries, are treated as expenses that do not affect the cost of goods sold. Therefore, variable costing focuses on the behavior of costs, allowing managers to better understand how changes in production volume affect overall costs.  The other options do not accurately describe the categories used in variable costing.

In Variable Costing, Costs Are Separated into the Major Categories