What factor related to manufacturing costs causes the difference in operating income computed
Using absorption costing and operating income computed using variable costing?
A)Absorption costing expenses all costs,whether fixed or variable.
B)Absorption costing "inventories" all direct manufacturing costs.
C)Absorption costing "inventories" all fixed manufacturing and period costs.
D)Absorption costing "inventories" all fixed manufacturing costs.

Question

Quizplus · Accepted Answer

Absorption costing "inventories" all fixed manufacturing costs, which causes the difference in operating income computed using absorption costing and operating income computed using variable costing. Variable costing expenses only variable costs and does not "inventory" any fixed costs, leading to a lower reported operating income compared to absorption costing when production exceeds sales.

What Factor Related to Manufacturing Costs Causes the Difference in Operating