A Reason Why Absorption Costing Income Statements Are Sometimes Difficult

Multiple Choice

A reason why absorption costing income statements are sometimes difficult to interpret is that:

A) they omit variable expenses entirely in computing net operating income.
B) they shift portions of fixed manufacturing overhead from period to period according to changing levels of inventories.
C) they include all fixed manufacturing overhead on the income statement each year as a period cost.
D) they ignore inventory levels in determining cost of goods sold.