Under absorption costing, the income statement is organized by

Question

Quizplus · Accepted Answer

Under absorption costing, both product costs (direct materials, direct labor, and overhead) and period costs (selling and administrative expenses) are included in the income statement. This is in contrast to variable costing, which only includes variable product costs in the income statement. Fixed costs are included in both absorption and variable costing, but are treated differently in terms of inventory valuation.

Under Absorption Costing, the Income Statement Is Organized by