Management would prefer to use either absorption costing or variable costing depending on:
A) which gives the highest profit figure.
B) which is required by the Australian accounting standards.
C) whether they consider the benefits of using variable costing outweigh the additional costs involved.
D) which is provided at the least cost.

Question

Quizplus · Accepted Answer

Management should consider the benefits of using variable costing before deciding which costing method to use. If they feel that the benefits of using variable costing outweigh the additional costs involved, then they should use variable costing. This decision should not be based on which method gives the highest profit figure or which is provided at the least cost. While Australian accounting standards may dictate certain requirements, management should still consider which method is most beneficial for their specific business needs.

Management Would Prefer to Use Either Absorption Costing or Variable