Which of the following is true about direct costing?
A)Direct costing involves certain fixed joint costs that cannot be clearly linked to a single unit of analysis.
B)Direct costing involves the use of contribution accounting.
C)Those favoring the direct costing approach argue there is only one accurate way to assign indirect costs.
D)Direct costing involves the use of occupancy cost.

Question

Quizplus · Accepted Answer

Direct costing involves using contribution accounting, where all variable costs are directly assigned to products or services. This makes it easier to determine the contribution margin of each product or service and make more informed pricing and production decisions. The other options are incorrect: A is false because direct costing excludes fixed joint costs, and C and D are incorrect because they do not accurately describe direct costing.

Which of the Following Is True About Direct Costing