The use of either absorption or variable costing will make little difference in companies:
A)with large inventories.
B)using just-in-time inventory methods.
C)with high fixed costs.
D)with high variable costs.

Question

Quizplus · Accepted Answer

Companies that use just-in-time inventory methods have minimal inventory levels, making the choice between absorption and variable costing irrelevant since there are few inventory costs to allocate. Alternatively, companies with substantial inventory levels (such as those with large inventories) or significant fixed costs (such as depreciation) may experience a significant difference in net income calculation, making the choice between absorption and variable costing more relevant. Companies with high variable costs may also see a significant difference in net income calculation but may not have a clear preference for absorption or variable costing.

The Use of Either Absorption or Variable Costing Will Make