Variable costing cannot be used for preparing financial reports for external users, such as investors and creditors.

Question

Quizplus · Accepted Answer

Variable costing is a managerial accounting technique that only includes variable costs in the cost of goods sold and does not allocate fixed costs. As a result, it may not accurately reflect the full cost of producing a product or service and may not be acceptable for external financial reporting purposes, which require the full absorption costing method.

Variable Costing Cannot Be Used for Preparing Financial Reports for External