Which of the following is an argument against the use of direct (variable)costing?
A)Absorption costing overstates the balance sheet value of inventories.
B)Variable factory overhead is a period cost.
C)Fixed manufacturing overhead is difficult to allocate properly.
D)Fixed manufacturing overhead is necessary for the production of a product.

Question

Quizplus · Accepted Answer

One argument against the use of direct (variable) costing is that it ignores fixed manufacturing overhead costs, which are necessary for the production of a product. This can lead to distortions in product cost and profitability analysis, especially if fixed overhead costs make up a significant portion of total manufacturing costs.

Which of the Following Is an Argument Against the Use