What Is the Primary Difference Between Variable and Absorption Costing

question 3

Multiple Choice

What is the primary difference between variable and absorption costing?

• A)inclusion of fixed selling expenses in product costs
• B)inclusion of variable factory overhead in period costs
• C)inclusion of fixed selling expenses in period costs
• D)inclusion of fixed factory overhead in product costs

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Definitions:

Uncollectible Receivables

Amounts owed to a company that it does not expect to collect and thus considers a loss.

Journalize

The process of recording transactions in an accounting journal, noting the debit and credit aspects of each transaction.

Percent of Sales Method

A financial analysis technique used to forecast future expenses or account balances as a percentage of sales revenue.

Direct Write-off Method

An accounting method where uncollectible accounts receivable are written off directly against income at the time they are deemed noncollectible.