What Factor Is the Cause of the Difference Between Operating

question 10

Multiple Choice

What factor is the cause of the difference between operating income computed using absorption costing and operating income computed using variable costing?

• A) Absorption costing considers all manufacturing costs in the determination of operating income, whereas variable costing considers only prime costs.
• B) Absorption costing allocates fixed manufacturing costs between cost of goods sold and inventories, and variable costing considers all fixed manufacturing costs as period costs.
• C) Absorption costing includes all variable manufacturing costs in product costs, but variable costing considers variable manufacturing costs to be period costs.
• D) Absorption costing includes all fixed manufacturing costs in product costs, but variable costing expenses all fixed manufacturing costs.

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Definitions:

Environmentalism

A social and political movement that seeks to protect and improve the health of the environment through advocacy for policies reducing negative human impact.

Communication

The process of exchanging information, ideas, thoughts, and feelings through speaking, writing, or other mediums.

Environmental Pricing Strategy

Pricing methods that incorporate environmental costs, encouraging sustainable consumer behavior and product design.

Corporate Accountability

The responsibility of corporations to be answerable for their actions and decisions, particularly regarding their impact on society and the environment.