Which of the following is not a disadvantage of using variable costing as opposed to absorption costing?
A) Variable accounting records do not conform to GAAP, so two sets of records must be maintained if the company is required to file their statements publicly.
B) Owners' Equity tends to be understated.
C) Accounting records are more costly to maintain.
D) Only variable costs are assigned to inventory, making poor management decisions (such as dropping a profitable product line) more likely to occur.
E) None of the above are disadvantages.

Question

Quizplus · Accepted Answer

D is not a disadvantage of variable costing. Variable costing can actually lead to better management decisions because it focuses on the costs that change with production levels, helping managers understand the impact of production volume on profitability.

Which of the Following Is Not a Disadvantage of Using