The only difference between the net income between variable costing and absorption costing is the treatment of ________.
A) variable selling costs
B) variable administrative costs
C) fixed selling costs
D) fixed manufacturing overhead costs

Question

Quizplus · Accepted Answer

The treatment of fixed manufacturing overhead costs is the only difference between net income under variable costing and absorption costing. Under variable costing, fixed manufacturing overhead costs are considered period expenses and are not included in the cost of goods sold. However, under absorption costing, fixed manufacturing overhead costs are included in the cost of goods sold and therefore impact net income. The treatment of variable selling costs, variable administrative costs, and fixed selling costs is the same under both costing methods.

The Only Difference Between the Net Income Between Variable Costing