What is the main difference between an absorption costing system and a variable costing system?

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Quizplus · Accepted Answer

The main difference between an absorption costing system and a variable costing system is the handling of fixed production costs. In absorption costing, fixed production costs are included in the cost of goods sold and are absorbed by the units produced. In contrast, in variable costing, fixed production costs are treated as period costs and are not allocated to the units produced. This difference can lead to variations in reported profits, especially when production volumes fluctuate.

What Is the Main Difference Between an Absorption Costing System