The adoption of variable costing for managerial decision making is based on the premise that fixed factory overhead costs are related to productive capacity of the manufacturing plant and are normally not affected by the number of units produced.

Question

Quizplus · Accepted Answer

Variable costing treats fixed factory overhead costs as period costs rather than product costs, based on the understanding that these costs do not vary with the number of units produced and are more related to the capacity and operational readiness of the manufacturing plant.

The Adoption of Variable Costing for Managerial Decision Making Is