Which of the following is not a potential advantage of variable costing relative to absorption costing?
A)Net income calculated under variable costing is unaffected by changes in production levels.
B)It is easier to understand the impact of fixed and variable costs on the computation of net income when variable costing is used.
C)The use of variable costing is consistent with cost-volume-profit analysis.
D)Net income calculated under variable costing is not closely tied to changes in sales levels.

Question

Quizplus · Accepted Answer

In fact, net income calculated under variable costing is directly affected by changes in sales levels because it only includes variable costs that are directly tied to the level of production or sales. However, this can also be seen as an advantage as it provides a clearer picture of the profitability of the company in relation to its sales.

Which of the Following Is Not a Potential Advantage of Variable