Which of the following is a potential advantage of variable costing relative to absorption costing?
A) Net income is affected by changes in production levels.
B) The use of variable costing is consistent with cost-volume-profit analysis.
C) Net income computed under variable costing is not closely tied to changes in sales levels.
D) More than one of the above.

Question

Quizplus · Accepted Answer

Variable costing ties costs directly to production output, making it consistent with cost-volume-profit analysis, which focuses on how profits are affected by volumes of sales, costs, and prices. This method only includes variable costs in product costs, making it easier to understand the impact of sales and production volume changes on profitability.

Which of the Following Is a Potential Advantage of Variable