Net income under direct costing and absorption costing approaches will always equal.

Question

Quizplus · Accepted Answer

Net income under direct costing and absorption costing approaches can differ due to the treatment of fixed manufacturing overhead costs. Direct costing considers fixed manufacturing overhead costs as period costs and does not assign them to products, while absorption costing includes these costs in the cost of the product. Therefore, the difference in treatment of fixed manufacturing overhead costs can result in different net income figures under the two approaches.

Net Income Under Direct Costing and Absorption Costing Approaches Will