Knowledge Check $01$

The difference between absorption costing net operating income and variable costing net operating income can be explained by the way these two methods account for $\_\_\_\_\_\_\_\_\_$blank.

multiple choice $1$

all overhead costs

fixed overhead costs

selling and administrative expenses

variable overhead costs

Knowledge Check $02$

Absorption costing income statements ignore $\_\_\_\_\_\_\_\_\_$blank.

multiple choice $2$

direct materials and direct labor costs

direct and indirect cost distinctions

product and period cost distinctions

variable and fixed cost distinctions

Knowledge Check $03$

When the number of units produced is greater than the number of units sold, variable costing net operating income will be $\_\_\_\_\_\_\_\_\_$blank.

multiple choice $3$

the same as absorption costing net operating income

greater than absorption costing net operating income

less than absorption costing net operating income