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Asked by Shakira Robertson on May 10, 2024

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The variable costing method is required for external financial reporting.

External Financial Reporting

The process of reporting financial information to external stakeholders, such as investors and creditors, through financial statements.

Variable Costing

A costing method that includes only variable production costs in the cost of goods sold and treats fixed manufacturing overhead as a period expense.

Method

A systematic way of doing things or a procedure. This definition is broadly applicable across different contexts including sciences, arts, and business operations.

  • Understand the necessary disclosures for different costing methodologies in external financial reports.
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LH
Lidia HurezanMay 15, 2024
Final Answer :
False
Explanation :
The variable costing method is not required for external financial reporting. Generally Accepted Accounting Principles (GAAP) allow for either the absorption costing or variable costing method to be used for external financial reporting. However, management may choose to use the variable costing method for internal reporting purposes.

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