In variable costing, an effect on cost volume profit relationship is driven by __________?
Correct answer: C. unit level of sales
- A. unit level of inventory
- B. unit level of production
- C. unit level of sales
- D. unit dividends
Explanation
Under variable costing, the cost-volume-profit relationship is driven primarily by sales volume because fixed manufacturing costs are expensed by period rather than attached to production. Production volume mainly affects inventory under absorption costing.
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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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