Variable costing is more appropriate than absorption costing when the decision ________.
A)relates to production planning within the capacity limits in the short run
B)involves reducing fixed costs that are controllable by the upper management
C)does not involve analysis of profitability based on sales mix
D)does not involve analysis of contribution margin

Question

Quizplus · Accepted Answer

Variable costing is more appropriate when making short-term production decisions because it only includes variable costs, making it easier to determine the impact of changing production levels on costs and profits. Absorption costing, on the other hand, includes both fixed and variable costs, which can make it more difficult to determine the true costs of production in the short run.

Variable Costing Is More Appropriate Than Absorption Costing When the Decision