Direct costing differs from absorption costing in that
A) under direct costing all fixed overhead is expensed in the current period.
B) under absorption costing all fixed manufacturing overhead is expensed in the current period.
C) under direct costing a portion of the fixed manufacturing overhead is included in the finished goods inventory.
D) under absorption costing an increase in finished goods inventory does not affect the amount of fixed costs expensed.

Question

Quizplus · Accepted Answer

Direct costing expenses all fixed overhead in the current period while absorption costing includes a portion of fixed overhead in the cost of goods sold and the remaining portion in the ending inventory.

Direct Costing Differs from Absorption Costing in That