When absorption costing is used
A)for external reporting, variable costing can still be used for internal reporting purposes.
B)management may be tempted to overproduce in a given period in order to decrease net income.
C)it facilitates cost-volume-profit analysis.
D)and production exceeds sales, absorption costing reports a lower net income than variable costing.

Question

Quizplus · Accepted Answer

Absorption costing is required for external financial reporting, but companies can use variable costing for internal decision-making and management purposes.

When Absorption Costing Is Used