Multiple Choice QuestionThe formula to convert income from variable to absorption costing is:Multiple choice question.income under variable costing plus variable overhead in ending finished goods inventory minus variable overhead in beginning finished goods inventory.income under variable costing plus fixed overhead in beginning finished goods inventory minus fixed overhead in ending finished goods inventory.income under variable costing plus fixed overhead in ending finished goods inventory minus fixed overhead in beginning finished goods inventory.

The correct answer is:

Income under variable costing plus fixed overhead in ending finished goods inventory minus fixed overhead in beginning finished goods inventory.

Here's why:

Under absorption costing, both variable and fixed manufacturing costs are included as part of the cost of the product, whereas under variable costing, only the variable manufacturing costs are included. The difference between the two methods is in the treatment of fixed manufacturing overhead costs.

In the conversion from variable to absorption costing, we need to adjust for the fixed overhead costs that were not included under variable costing. This is done by adding the fixed overhead in the ending finished goods inventory (which was not included under variable costing) and subtracting the fixed overhead in the beginning finished goods inventory (which was included under variable costing).

So, the formula becomes: Income under variable costing + Fixed overhead in ending finished goods inventory - Fixed overhead in beginning finished goods inventory.