Variable costing is more important for external reports than internal reports.

Question

Quizplus · Accepted Answer

Variable costing is more important for internal reports as it helps in making decisions related to pricing, production, and inventory management. However, for external reports, generally accepted accounting principles (GAAP) require absorption costing which includes both variable and fixed costs in product costs. Therefore, external reports usually use absorption costing rather than variable costing.

Variable Costing Is More Important for External Reports Than Internal