Asked by Shana Llewellyn on Jul 13, 2024
Verified
Information presented in a variable costing format can assist management when making short-term pricing decisions.
Variable Costing Format
An accounting method that only includes variable production costs (direct materials, direct labor, and variable manufacturing overhead) in product costs.
Short-Term Pricing Decisions
Pricing strategies and choices made by a business to address immediate market demands, competitive pricing, or product lifecycle stages.
- Determine the significance of fixed and variable expenses in setting product prices and making immediate decisions.
Verified Answer
AO
Alondra OrozcoJul 17, 2024
Final Answer :
True
Explanation :
Variable costing format separates fixed costs from variable costs, which allows management to understand the cost behavior of their products/services. This understanding can assist management in making short-term pricing decisions by helping them determine the breakeven point and the impact of changes in variable costs on profitability.
Learning Objectives
- Determine the significance of fixed and variable expenses in setting product prices and making immediate decisions.
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