The following are potential advantages of variable costing:
a. Net income computed under variable costing is unaffected by changes in production levels.
b. The use of variable costing is consistent with cost-volume-profit and incremental analysis.
c. Net income computed under variable costing is closely tied to changes in sales levels giving a more realistic assessment of a company”s success or failure.
d. The presentation of fixed and variable cost components on the face of the variable costing income statement makes it easier to identify these costs and understand their effect on the business.
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