Which is most consistent with cost-volume-profit analysis?
A)Variable costing
B)Full costing
C)Absorption costing
D)JIT

Question

Quizplus · Accepted Answer

Cost-volume-profit analysis focuses on the relationships between the volume of units sold, the sales revenue earned, the cost of producing those units, and the profits earned. Variable costing is the method that separates variable costs (which change with the level of production) from fixed costs (which do not change with the level of production), and this separation is crucial in understanding the cost behavior and profit implications of changes in the level of production. Full costing and absorption costing both include fixed costs in the cost of each unit produced, which can be misleading in calculating the profit implications of changes in production levels. JIT is a production management philosophy that emphasizes the elimination of waste and the efficient use of resources, and while it may be consistent with cost-volume-profit analysis in some respects, it is not a costing method by itself.

Which Is Most Consistent with Cost-Volume-Profit Analysis