Absorption costing is more appropriate than variable costing for making plant production capacity decisions in the long run.

Question

Quizplus · Accepted Answer

Absorption costing takes into account all costs, including fixed manufacturing overhead costs, while variable costing only includes variable costs. Since plant production capacity decisions usually involve long-term planning and investment, absorption costing provides a more accurate picture of the total cost of production and is therefore more appropriate in this scenario.

Absorption Costing Is More Appropriate Than Variable Costing for Making