Compared to using absorption costing, using variable costing will result in operating income for the 4-month period to be
A) Higher
B) Lower
C) Same
D) Cannot be determined

Question

Quizplus · Accepted Answer

Under variable costing, only variable costs are included in product costs, while fixed manufacturing overhead is expensed in the period incurred. This typically results in lower operating income compared to absorption costing, where fixed manufacturing overhead is allocated to products and included in inventory costs.

Compared to Using Absorption Costing, Using Variable Costing Will Result