Accountants Prefer the Variable Costing Method Over Absorption Costing Method

question 41

Multiple Choice

Accountants prefer the variable costing method over absorption costing method for evaluating the performance of a company because

• A) by using the absorption costing method,income could appear to be higher by producing more inventory.
• B) by using the absorption costing method,income could appear to be lower by producing more inventory.
• C) by using the variable costing method,the cost of goods sold will be higher as more units are manufactured and sales remain the same.
• D) by using the variable costing method,all fixed and variable costs are included in the unit cost of the product manufactured.