In absorption costing,the manufacturing costs expensed are greater than the amount expensed in variable costing when units produced are less than sold because the units in beginning inventory under absorption costing were assigned a greater cost in the previous accounting period.

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Quizplus · Accepted Answer

In absorption costing, fixed manufacturing costs are included in the cost of each unit produced and are expensed when units are sold rather than when they are produced. Therefore, if units produced are less than units sold, there will be some fixed manufacturing costs that were expensed in the previous period that will be included in the cost of units in beginning inventory, resulting in a higher cost of goods sold and lower net income under absorption costing compared to variable costing.

In Absorption Costing,the Manufacturing Costs Expensed Are Greater Than the Amount