Which of the Following Is a Valid Reason for Using

question 132

Multiple Choice

Which of the following is a valid reason for using variable costing?

• A) Fixed production cost should be ignored when costing units of inventory since it is not essential to the production process.
• B) Absorption costing recognizes fixed costs as expense regardless of volume of production.
• C) Absorption costing may motivate managers to overproduce in order to increase profits.
• D) Under variable costing managers can increase profitability by increasing the volume of production.

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Definitions:

Personal Fulfillment

A sense of satisfaction or achievement an individual feels upon meeting personal goals, values, or desires.

Shelter

A structure that provides protection from the environment, including homes, buildings, and temporary accommodations.

Physiological Need

A basic bodily requirement that people need to survive, such as food, water, and shelter.

Maslow Hierarchy

A theory of human motivation depicted as a pyramid, with basic needs at the base ascending to self-actualization needs at the top.