Which of the following is not true when determining the selling price for a product?
A) Absorption costing should be used to determine routine pricing which include both fixed and variable costs.
B) As long as the selling price is set above the variable costs, the company will make a profit in short run.
C) Variable costing is effective when determining short run decisions, but absorption costing is only used for long-term pricing policies.
D) Both variable and absorption pricing plans should be considered, to include several pricing alternatives.

Question

Quizplus · Accepted Answer

This statement is not true as variable costing can also be used for long-term pricing policies. Variable costing allocates only variable costs to the product while absorption costing allocates both variable and fixed costs. Both methods can be used for short-term and long-term pricing decisions.

Which of the Following Is Not True When Determining the Selling