An approach used for choosing capacity level, having no beginning inventory, is classified as __________?
Correct answer: B. write off variance approach
- A. write in variance approach
- B. write off variance approach
- C. adjusted variance approach
- D. unadjusted variance approach
Explanation
Under the write-off variance approach, the production-volume variance is written off rather than allocated among inventory accounts. This is commonly applied when there is no beginning inventory to complicate the allocation.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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