Which of the following is not true when determining the selling price for a product?
A)Absorption costing should be used to determine routine pricing which includes both fixed and variable costs.
B)As long as the selling price is set above the variable costs, the company will make a profit in the short run.
C)Variable costing is effective when determining short-run decisions, but absorption costing is only used for long-term pricing policies.
D)Both variable and absorption pricing plans should be considered, to include several pricing alternatives.

Question

Quizplus · Accepted Answer

Variable costing is indeed used for short-run decision-making because it considers only variable costs, which are directly affected by the level of production. However, absorption costing, which includes both fixed and variable costs, is not limited to long-term pricing policies but is also used for routine pricing decisions, making the statement in C incorrect.

Which of the Following Is Not True When Determining the Selling