Variable costing net operating income is usually closer to the net cash flow of a period than is absorption costing net operating income.
The statement is true.
Variable costing is a idea used in managerial and price accounting wherein the fixed manufacturing overhead is excluded from the product value of manufacturing.
The method contrasts with absorption costing, wherein the fixed manufacturing overhead is allocated to products produced.
Examples of variable prices encompass a production corporation's prices of uncooked substances and packaging—or a retail business enterprise's credit card transaction charges or transport expenses, which rise or fall with sales.
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