Asked by abdulbaset charsi on May 16, 2024
Verified
Variable costing separates variable costs from fixed costs and therefore makes it easier to identify and assign control over costs.
Variable Costing
An accounting method that only includes variable costs (costs that change with production levels) in product costs.
Fixed Costs
Expenses that do not change regardless of the level of production or sales, such as rent, salaries, and insurance.
Cost Control
A process of managing and regulating the expenses of operating a business to maximise profitability.
- Understand the behavior of fixed and variable costs in relation to production and sales decisions.
Verified Answer
MM
Melissa MailboyMay 22, 2024
Final Answer :
True
Explanation :
Variable costing only considers variable costs, which can be more easily controlled or influenced by managers. Fixed costs are treated as period costs and are not allocated to the product or service, allowing for a clearer understanding of the true cost of production. This makes it easier for managers to identify areas where costs can be reduced or where resources can be allocated more effectively.
Learning Objectives
- Understand the behavior of fixed and variable costs in relation to production and sales decisions.