Final answer:
The claim is false; absorption costing includes fixed manufacturing overhead while variable costing does not. Absorption costing accounts for all manufacturing costs, while variable costing only includes costs that vary with production.
Step-by-step explanation:
The statement that Variable costing includes fixed manufacturing overhead (FMOH) whereas Absorption costing does not is False. In fact, it's the other way around. Absorption costing includes all manufacturing costs, including fixed manufacturing overhead, as part of the cost of a product. In contrast, variable costing only includes variable manufacturing costs—such as direct materials, direct labor, and variable manufacturing overhead—and excludes fixed manufacturing overhead from the product costs.
Total costs in a business comprise both variable costs and fixed costs. Despite the level of production, fixed costs like rent, equipment, and salaried labor remain constant. On the other hand, variable costs fluctuate with the level of output, such as costs for hiring additional barbers at a barbershop, or additional costs incurred by a website when web traffic exceeds its capacity and requires more server space.