The method of cost accounting that lends itself to break-even analysis is
A)variable.
B)standard.
C)absolute.
D)absorption.

Question

Quizplus · Accepted Answer

The method of cost accounting that lends itself to break-even analysis is the variable costing method. This is because it separates fixed and variable costs, allowing us to determine the contribution margin and break-even point. With variable costing, we can calculate the amount of sales needed to cover all variable costs and fixed costs, which is essential in break-even analysis. Standard costing focuses on setting predetermined standards for costs and performance, while absolute costing is not a recognized method of cost accounting. Absorption costing includes fixed costs in the cost of goods sold, which can distort break-even analysis results.

The Method of Cost Accounting That Lends Itself to Break-Even