Why Do Companies Use Variable Costing for Internal Financial Statements

question 21

Multiple Choice

Why do companies use variable costing for internal financial statements?

• A) Production volume variance does not affect variable costing income but it does affect absorption costing income.
• B) Variable costing does not create an incentive to produce additional unneeded units to increase net income.
• C) A sales-oriented company wants to track the effect of sales on net income.
• D) All of the above