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External-reporting purposes

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In the United States, about one in every four companies uses variable costing for internal reporting purposes. These companies must make adjustments to these reports for external-reporting purposes. Explain what these adjustments are and why they need to be made.

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Solution explains the purposes of external-reporting.

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Variable costing is used for internal reporting purposes and it is used by the management for taking decisions like make or buy, continuance or dropping of a particular product/ department, accepting special order etc., However, ...

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