The only difference between variable and absorption costing is the accounting for
A) direct labour.
B) fixed manufacturing overhead.
C) direct materials.
D) variable manufacturing overhead.

Question

Quizplus · Accepted Answer

The only difference between variable and absorption costing is the accounting for fixed manufacturing overhead. In absorption costing, fixed manufacturing overhead is included in the cost of the product, while in variable costing, fixed manufacturing overhead is treated as a period cost and is expensed in the period in which it is incurred. The accounting for direct labour, direct materials, and variable manufacturing overhead is the same in both costing methods.

The Only Difference Between Variable and Absorption Costing Is the Accounting