The difference in the amount of fixed overhead cost that is expensed to the income statement under absorption and variable costing is solely attributable to the difference between the number of units produced during the period and the number of units sold.
AASCB: Analytic

Question

Quizplus · Accepted Answer

Under absorption costing, all fixed manufacturing overhead costs are allocated to the units produced, regardless of sales volume, leading to a difference in expensed amount when compared to variable costing, which expenses fixed overhead costs in the period they are incurred. The difference in expensed amount between the two methods is indeed due to the difference between units produced and units sold.

The Difference in the Amount of Fixed Overhead Cost That