Barlow Company manufactures three products and wants to determine the profitability of each product. Which type of accounting would be most appropriate for providing detailed cost information about each product line?

• A. Financial accounting
• B. Auditing
• C. Managerial accounting
• D. Tax accounting

Answer: (C)

Verified step by step guidance

1. Understand the purpose of the question: The company wants to determine the profitability of each product line, which requires detailed cost information specific to each product.
2. Recognize the types of accounting mentioned: Financial accounting focuses on external reporting, auditing ensures compliance and accuracy of financial records, and tax accounting deals with tax-related matters. Managerial accounting, however, is designed for internal decision-making and provides detailed cost information.
3. Identify the role of managerial accounting: Managerial accounting helps businesses analyze costs, revenues, and profitability at a granular level, such as by product line, department, or project. It is used internally by management to make informed decisions.
4. Explain why managerial accounting is the most appropriate: Managerial accounting provides tools like cost analysis, budgeting, and performance evaluation, which are essential for determining the profitability of individual product lines.
5. Conclude that managerial accounting is the correct choice because it aligns with the company's goal of obtaining detailed cost information to assess profitability for each product line.