The primary difference between variable and absorption costing is the treatment of:
A) fixed selling and administrative costs.
B) variable selling and administrative costs.
C) fixed manufacturing overhead.
D) variable manufacturing overhead.

Question

Quizplus · Accepted Answer

The primary difference between variable and absorption costing is that variable costing only includes variable manufacturing overhead as part of product costs, while absorption costing includes all manufacturing overhead costs, including fixed manufacturing overhead. Fixed selling and administrative costs and variable selling and administrative costs are treated the same way under both costing methods.

The Primary Difference Between Variable and Absorption Costing Is the Treatment