What factor, related to manufacturing costs, causes the difference in net earnings computed using absorption costing and net earnings computed under direct costing? * , Absorption costing considers all costs in the determination of net earnings whereas direct costing considers only direct costs. Absorption costing allocates fixed costs between costs of goods sold and inventories, and direct costing considers all fixed costs to be period costs. Absorption costing "inventories" all fixed costs for the period in ending finished goods inventory, but direct costing expenses all fixed costs. O Absorption costing "inventories" all direct costs, but direct costing considers direct costs to be period costs.
What factor, related to manufacturing costs, causes the difference in net earnings computed using absorption costing and net earnings computed under direct costing? * , Absorption costing considers all costs in the determination of net earnings whereas direct costing considers only direct costs. Absorption costing allocates fixed costs between costs of goods sold and inventories, and direct costing considers all fixed costs to be period costs. Absorption costing "inventories" all fixed costs for the period in ending finished goods inventory, but direct costing expenses all fixed costs. O Absorption costing "inventories" all direct costs, but direct costing considers direct costs to be period costs.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:What factor, related to manufacturing costs, causes the difference in net earnings computed
using absorption costing and net earnings computed under direct costing? * ,
Absorption costing considers all costs in the determination of net earnings whereas direct costing considers
only direct costs.
Absorption costing allocates fixed costs between costs of goods sold and inventories, and direct costing
considers all fixed costs to be period costs.
Absorption costing "inventories" all fixed costs for the period in ending finished goods inventory, but direct
costing expenses all fixed costs.
O Absorption costing "inventories" all direct costs, but direct costing considers direct costs to be period costs.
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