Income reported under absorption costing and variable costing is:
A) always the same.
B) typically different.
C) always higher under absorption costing.
D) always higher under variable costing.
E) always the same or higher under absorption costing.

Question

Quizplus · Accepted Answer

Income reported under absorption costing and variable costing is typically different because absorption costing includes both fixed and variable manufacturing costs in product costs, while variable costing includes only variable manufacturing costs. This difference in cost treatment can lead to different income amounts under each method, especially when there is a change in inventory levels.

Income Reported Under Absorption Costing and Variable Costing Is