Asked by Karmel Abdeljalil on Jun 03, 2024

verifed

Verified

Variable costing is an acceptable costing method for GAAP.

Variable Costing

A costing method that includes only variable production costs (materials, labor, and overhead) in the cost of goods sold and treats fixed overhead expenses as period costs.

GAAP

Generally Accepted Accounting Principles, a common set of accounting rules and standards used in the United States for preparing financial statements.

  • Understand the distinctions among different costing approaches (absorption, variable) and their effects on financial statements.
verifed

Verified Answer

ZK
Zybrea KnightJun 06, 2024
Final Answer :
False
Explanation :
Variable costing is not acceptable for external reporting purposes under Generally Accepted Accounting Principles (GAAP) because GAAP requires the absorption costing method, which includes both fixed and variable manufacturing costs in the cost of inventory.