Which of the following must be known about a production process in order to institute a variable costing system?
A)the variable and fixed components of all costs related to production
B)the controllable and non-controllable components of all costs related to production
C)standard production rates and times for all elements of production
D)contribution margin and break-even point for all goods in production

Question

Quizplus · Accepted Answer

In order to institute a variable costing system, it is necessary to know the variable and fixed components of all costs related to production. This is because variable costing only includes variable costs, while fixed costs are treated as period expenses. Without knowing the variable and fixed components of costs, it is not possible to determine which costs should be included in the cost of production and which costs should be treated as period expenses. The other options listed may be relevant to production management but are not directly related to variable costing.

Which of the Following Must Be Known About a Production