What factor related to manufacturing costs causes the difference in net earnings computed using absorption costing and net earnings computed using variable costing?
A)Absorption costing considers all costs in the determination of net earnings,whereas variable costing considers only direct costs.
B)Absorption costing "inventories" all direct costs,but variable costing considers direct costs to be period costs.
C)Absorption costing "inventories" all fixed manufacturing costs for the period in ending finished goods inventory,but variable costing expenses all fixed costs.
D)Absorption costing allocates fixed manufacturing costs between cost of goods sold and inventories,and variable costing considers all fixed costs to be period costs.

Question

Quizplus · Accepted Answer

The difference in net earnings computed using absorption costing and net earnings computed using variable costing is caused by the fact that absorption costing allocates fixed manufacturing costs between cost of goods sold and inventories, whereas variable costing considers all fixed costs to be period costs. This leads to a difference in the amount of fixed costs expensed in the period, which affects the calculation of net earnings.

What Factor Related to Manufacturing Costs Causes the Difference in Net