A reason why absorption costing income statements are sometimes difficult to interpret is that: Multiple Choice   they omit variable expenses entirely in computing net operating income.   they shift portions of fixed manufacturing overhead from period to period according to changing levels of inventories.   they include all fixed manufacturing overhead on the income statement each year as a period cost.   they ignore inventory levels in determining cost of goods sold.

The costs assigned to units in inventory are typically lower under absorption costing thanunder vanable costinaTRUEFALSE Operating profits move in the same direction as sales when variable costing is used ifselling prices, the sales mix and the cost structure remain the sameTRUEFALSE Absorption costing is more compatible with cost-volume-profit analysis than is variablecosting.TRUEFALSE Variable manufacturing overhead costs are treated as period costs under bothabsorption and variable costingTRUEFALSE Operating profit is affected by changes in production under both the variable costing andabsorption costing approachesTRUEFALSE In a manufacturing company using absorption costing, the fixed costs associated withidle production capacity are commonly included as part of the product cost.TRUEFALSE In activity-based costing, some manufacturing costs may be excluded from product costsTRUEFALSE The margin of safety can be defined as the amount by which sales can decrease beforelosses are…

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The president of X Corporation requested you to explain the difference in profit between the variable costing income statement presentation and the absorption method. You would say that: *     a. There is no difference if there is no change in the fixed costs in the beginning and ending inventories.       b. The difference is equal to the fixed cost per unit times the number of units sold.       c. The difference is attributable to the variable costs in the inventory.       d. The difference is attributable to the fixed cost in ending inventory.