ECONOMICS

Detailed explanation-1: -The advantages of the variable costing Variable costing provides management with data on variable costs and contribution margins needed to make daily decisions on special orders, capacity expansion, and production shutdown.

Detailed explanation-2: -Wages are variable costs in a firm, as the number of employees required will vary based on the demand for production, therefore the wages paid to the total number of employees will vary with the number of employees.

Detailed explanation-3: -Examples of variable costs are sales commissions, direct labor costs, cost of raw materials used in production, and utility costs.

Detailed explanation-4: -Variable costing is more useful than absorption costing if a company wishes to compare different product lines’ potential profitability. It is easier to discern the differences in profits from producing one item over another by looking solely at the variable costs directly related to production.