Variable Costing Is

question 92

Multiple Choice

Variable costing is

• A) a good way to value inventories for the balance sheet.
• B) used for external reporting purposes.
• C) not useful for companies with multiple segments.
• D) a useful tool for management decision making.
• E) can only be used by start-up companies.

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Definitions:

FIFO Method

A method of inventory valuation where the first items placed in inventory are the first ones to be used or sold.

Mixing Department

A specific section within a manufacturing facility where raw materials are combined to produce a homogeneous product.

Equivalent Units

A calculation used in process costing that converts partially completed units into a number of fully completed units, facilitating cost analysis.

FIFO Method

Stands for "First In, First Out," a method of inventory valuation where the oldest items are sold first.