Variable costing is
A) a good way to value inventories for the balance sheet.
B) used for external reporting purposes.
C) not useful for companies with multiple segments.
D) a useful tool for management decision making.
E) can only be used by start-up companies.

Question

Quizplus · Accepted Answer

Variable costing is a useful tool for management decision making as it provides a clearer picture of the costs associated with producing goods or services. While it may not be the best method for valuing inventories on the balance sheet or for external reporting purposes, it can be helpful in determining product pricing, identifying cost savings opportunities, and estimating breakeven points. It is also suitable for companies with multiple segments, as it allows for more accurate cost allocation among different business lines. The use of variable costing is not restricted to start-up companies and can be implemented by any organization.

Variable Costing Is