The variable costing format is often more useful to managers than the absorption costing format because
A)costs are classified by their behavior.
B)costs are always lower.
C)it is required for external reporting.
D)it justifies higher product prices.

Question

Quizplus · Accepted Answer

The variable costing format categorizes costs by their behavior, allowing managers to better understand and analyze the costs associated with producing and selling products. This can help with decision-making, such as whether to continue producing certain products or to adjust pricing strategies. Additionally, absorption costing may allocate fixed manufacturing overhead costs to products, which can create distorted product costs and mislead managers in their decision-making.

The Variable Costing Format Is Often More Useful to Managers