Asked by Johnny Guittard on Jul 05, 2024
Verified
Which of the following is not an advantage of the variable cost pricing formula?
A) Variable cost analysis is consistent with cost volume profit analysis.
B) Variable cost data does not require the allocation of common fixed costs to individual product lines.
C) Variable costs help managers understand the profit implications of changes in price.
D) It is cost effective to use because it is required for external reporting.
Variable Cost Pricing
Setting prices based on the variable costs of producing a product, ignoring fixed costs.
External Reporting
The process of reporting financial and other information to stakeholders outside the organization, such as investors and regulatory authorities.
Cost Volume Profit Analysis
A financial analysis tool used to determine the changes in costs and volume on an organization's profit.
- Discern the variations among different cost models and their effects on pricing strategies.
Verified Answer
SB
Shamara BullockJul 08, 2024
Final Answer :
D
Explanation :
The variable cost pricing formula is not required for external reporting, so it is not an advantage that it is cost effective to use for that purpose.
Learning Objectives
- Discern the variations among different cost models and their effects on pricing strategies.