For short-run production planning, information in the variable costing format is more useful to management than is information in the absorption costing concept format.

Question

Quizplus · Accepted Answer

Variable costing provides information that helps management make decisions about pricing and production levels by only including variable costs in product costs, making it more relevant for short-run decisions compared to absorption costing which includes both fixed and variable manufacturing costs, potentially obscuring short-term profitability analysis.

For Short-Run Production Planning, Information in the Variable Costing Format