La Lisa uses FIFO for inventory costing: Beginning Inventory 300 units Units Produced 600 Units Sold 600 Prior year Budgeted Fixed Overhead Rate P 50/unit Current year Budgeted Fixed Overhead Rate P 44/unit Which of the following statements is true about the difference between absorption-costing and variable-costing operating income? Absorption-costing is P 1,800 less than variable-costing operating income. Absorption-costing is P 1,800 more than variable-costing operating income. Absorption-costing is P 15,000 less than variable-costing operating income. Absorption-costing is P 15,000 more than variable-costing operating income.

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Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit.  Overhead expenses depend upon the nature of the business operations.