3. Some managers may prefer absorption costing and others may prefer
variable costing. Managers may prefer absorption costing because ab-
sorption costing is used on external financial reports, because they pre-
fer absorption costing on theoretical grounds, or because absorption
costing profits are easier to manipulate than variable costing profits—
just increase or decrease inventories. Other managers may prefer vari-
able costing because it is easier to understand, because it is easier and
more appropriate to use in decisions, because they prefer variable cost-
ing on theoretical grounds, or because it isn’t subject to fluctuations due
to changes in inventories.
© The McGraw-Hill Companies, Inc., 2006. All rights reserved.
Solutions Manual, Chapter 7 397
Bạn đang xem 3. - SOLUTIONS TO QUESTION MANAGERIAL ACCOUNTING CH07 VARIBLE COSSTING TOOL FOR MANAGEMENT