The difference between absorption manufacturing cost and total cost with respect to product pricing is caused by:
A) variable manufacturing cost.
B) applied fixed manufacturing cost.
C) variable selling and administrative cost.
D) allocated fixed selling and administrative cost.
E) both variable selling and administrative cost and allocated fixed selling and administrative cost.

Question

Quizplus · Accepted Answer

Absorption manufacturing cost includes all manufacturing costs (both variable and fixed), while total cost also includes selling and administrative costs (both variable and fixed). Therefore, the difference is due to the selling and administrative costs.

The Difference Between Absorption Manufacturing Cost and Total Cost with Respect