Because managers want stable unit cost figures,the accountant creates an artificial stability so far as fixed costs are concerned by applying fixed costs to products as if the fixed costs were really variable.

Question

Quizplus · Accepted Answer

Managers typically prefer stable unit cost figures to help with their budgeting and forecasting. However, fixed costs remain constant regardless of the level of production, so the accountant may allocate them to products as if they were variable costs to give the appearance of stability in unit costs. This is an artificial method of achieving stability and not reflective of the true cost behavior of fixed costs.

Because Managers Want Stable Unit Cost Figures,the Accountant Creates an Artificial