UNIT 8 $6,860 ($9,800 X .70) COST OF NEXT 7 UNITS = (8 X $6,860...

167. Correct answer b. The difference between variable and absorption costing is the treatment

of fixed manufacturing overhead. All fixed manufacturing overhead is expensed during the

period using variable resulting in lower operating income. The difference is the fixed

manufacturing overhead that is included in inventory when using absorption costing.