Variable costing is utilized to evaluate the performance of
A)investment centers.
B)revenue centers.
C)cost centers.
D)profit centers.

Question

Quizplus · Accepted Answer

Variable costing is used to evaluate the performance of profit centers. Profit centers are responsible for generating revenue, and therefore, it is important to evaluate their performance in terms of profitability. Variable costing helps to do this by separating variable costs (i.e. costs that vary depending on the level of activity) from fixed costs (i.e. costs that do not vary with the level of activity), which helps to determine the contribution margin of a profit center. By evaluating the contribution margin, managers can determine the profitability of the profit center and make decisions about how to improve it.

Variable Costing Is Utilized to Evaluate the Performance of