Since variable costing emphasizes costs by behavior, it works well with cost-volume-profit analysis.

Question

Quizplus · Accepted Answer

Variable costing classifies costs by behavior (variable and fixed) rather than by function (such as production or selling) and as a result, it is well suited for cost-volume-profit analysis. This is because variable costing focuses on the relationship between sales volume, revenue, and costs, which is critical in achieving breakeven points and targeting profits.

Since Variable Costing Emphasizes Costs by Behavior, It Works Well