An advantage of estimating variable costs by the account classification method is
A)It is less demanding than other methods
B)It provides statistical analysis
C)It is easy to implement.
D)It can provide very accurate estimates.
E)None of the above is an advantage.

Question

Quizplus · Accepted Answer

The account classification method involves analyzing each account in the company's records and determining whether it is a variable or fixed cost. This method can provide very accurate estimates because it analyzes actual expenses and their relation to changes in production or sales volume. This method also allows for more detailed analysis of each individual account, which can lead to better understanding of the company's cost structure.

An Advantage of Estimating Variable Costs by the Account Classification