Question

LO 6.5What is the primary difference between variable costing and absorption costing?

Answer 1

The following are the differences between the variable costing and the absorption costing are as follows:

• The variable costing is works on the concept of managerial accounting costing and on the other hand, the absorption costing is basically refers to the manufacturing cost.
• The variable costing increasing the overall production cost and the it only include the variable cost directly in the production process. The absorption costing include the fixed cost in the production process.
• The variable costing is not used for the purpose like external reporting whereas, the absorption costing include the actual cost of the specific finished products an the services.