In managerial accounting,variable cost is a reasonable approximation of marginal cost in many situations.

Question

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Variable cost is the cost that changes in direct proportion to changes in activity level or volume. Marginal cost, on the other hand, is the cost of producing one more unit or serving one more customer. In many cases, variable costs can be used as a reasonable approximation of marginal costs, especially when the change in activity level is small. Therefore, the statement is true.

In Managerial Accounting,variable Cost Is a Reasonable Approximation of Marginal