Full costing is
A)more useful for decision making than variable costing because it treats all costs of production as an inventory cost.
B)required for financial reporting under generally accepted accounting principles.
C)less likely to enable managers to manipulate income by increasing production.
D)based on cost behavior.

Question

Quizplus · Accepted Answer

Full costing is required for financial reporting under generally accepted accounting principles (GAAP). Option A is incorrect because variable costing treats only variable costs as inventory cost and fixed costs as period costs, and this method is more useful for decision making in some situations. Option C is incorrect because full costing can be manipulated by production volume changes just like any other cost measurement method. Option D is not entirely correct because full costing considers both fixed and variable costs, not just cost behavior.

Full Costing Is