Question
When sales are more than production, operating income will be lower under absorption costing than under variable costing. If we assume no ending inventory balances,
When sales are more than production, operating income will be lower under absorption costing than under variable costing. If we assume no ending inventory balances, which of the following gives the best justification of the above statement?
A. All costs incurred have been accounted for as expenses
B. Fixed manufacturing costs have not been used in calculating operating profits
C. Some of the fixed manufacturing overhead is still in the ending Finished Goods Inventory
D. Units in beginning Finished Goods Inventory have manufacturing fixed costs allocated to them
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started