What is the costing method that can be used most easily with break-even analysis and other cost-volume-profit techniques?
A) Variable costing.
B) Absorption costing.
C) Process costing.
D) Job-order costing.

Question

Quizplus · Accepted Answer

Variable costing is a costing method that takes into account only the variable costs of production. This method is very useful in performing break-even analysis and other cost-volume-profit techniques because it separates fixed and variable costs. This allows for easy identification of the contribution margin and calculation of the break-even point. In contrast, absorption costing includes both fixed and variable costs in the product cost, making it more difficult to perform cost-volume-profit analysis. Therefore, variable costing is the best choice for using with cost-volume-profit techniques.

What Is the Costing Method That Can Be Used Most