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ACC 350 WEEK 10 QUIZ 8 CHAPTER 9 STR
The two most common methods of costing inventories in manufacturing companies are variable costing and fixed costing.
Absorption costing “absorbs” only variable manufacturing costs.
Variable costing includes all variable costs?both manufacturing and nonmanufacturing?in inventory.
Under both variable and absorption costing, all variable manufacturing costs are inventoriable costs.
The main difference between variable costing and absorption costing is the way in which fixed manufacturing costs are accounted for.
Under variable costing, fixed manufacturing costs are treated as an expense of the period.
The contribution-margin format of the income statement is used with absorption costing.