Accountants Prefer the Variable Costing Method Over Absorption Costing Method

question 35

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 method, more sales will be generated.
• 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.

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Definitions:

Testator

A person who has made a will or given a legacy.

Private Ownership

The legal right held by individuals or entities to own property or businesses, allowing for control and use exclusive of government or public intervention.

Testator's Marriage

The legal union of a person who has made a will, potentially affecting the distribution of their estate upon their death.

Intestacy Laws

State statutes that specify how property will be distributed when a person dies intestate (without a valid will).