ANS:-
The advantages & disadvantages of using variable costing method for internal reporting purposes include the following ,
Advantages:-
01.Variable costing aids in forecasting and reporting income for decision making purposes.
02.Fixed cost reported in total amount,thereby increasing the opportunity for more effective control this cost.
03. profit vary directly with the sales volume and are not affected by change in inventory level
04.Ability to CVP analysis for internal management decision making purposes.
Disadvantages:-
The disadvantages of using variable costing method for internal reporting purposes include the following ,
01. Variable costing lacks acceptability for external financial reporting purposes and can not be used for income taxes.
02.It may difficult to determine what costs are fixed and what cost are variable.