When comparing absorption and variable costing which of the following is false?
A)The difference between absorption costing and variable costing is the treatment of fixed manufacturing overhead.
B)Selling and administrative costs are period costs under both absorption and variable costing.
C)Companies that use just-in-time processing techniques will have significant differences between absorption and variable-costing net income.
D)Absorption costing will show a higher net income than variable costing whenever there are more units produced than sold.

Question

Quizplus · Accepted Answer

Just-in-time (JIT) processing techniques aim to minimize inventory levels, which reduces the differences in inventory valuation between absorption and variable costing. Thus, companies using JIT will not have significant differences between absorption and variable-costing net income because both methods would have minimal inventory differences to account for.

When Comparing Absorption and Variable Costing Which of the Following