Generally,how will inventory values calculated using variable costing compare to inventory values calculated using absorption costing?
A)Inventory values calculated using variable costing will be equal to inventory values calculated using absorption costing.
B)Inventory values calculated using variable costing will be less than inventory values calculated using absorption costing.
C)Inventory values calculated using variable costing will be greater than inventory values calculated using absorption costing.
D)Inventory values calculated using variable costing will be twice as much as inventory values calculated using absorption costing.

Question

Quizplus · Accepted Answer

Inventory values calculated using variable costing will be less than inventory values calculated using absorption costing because variable costing only includes variable manufacturing costs in the inventory value, while absorption costing includes both variable and fixed manufacturing costs. Therefore, variable costing generally results in lower inventory values than absorption costing.

Generally,how Will Inventory Values Calculated Using Variable Costing Compare to Inventory