Which of the following statements is true regarding variable costing?
A)It is a traditional costing approach.
B)Only manufacturing costs that change in total with changes in production level are included in product costs.
C)It is not permitted to be used for managerial reporting.
D)It treats overhead in the same manner as absorption costing.
E)It makes it easier to manipulate earnings with changes in production levels.

Question

Quizplus · Accepted Answer

Variable costing only includes manufacturing costs that change in total with changes in production level in product costs. It is a modern costing approach and is widely used for managerial reporting. It treats overhead differently from absorption costing, as it does not include fixed overhead in product costs. It can make it easier to manipulate earnings with changes in production levels, but this is not a characteristic of the method itself, rather a potential consequence of how management may choose to use the information derived from it.

Which of the Following Statements Is True Regarding Variable Costing