Which of the following statements is TRUE?
A)Absorption costing net income exceeds variable costing net income when units produced and sold are equal.
B)Variable costing net income exceeds absorption costing net income when units produced exceed units sold.
C)Absorption costing net income exceeds variable costing net income when units produced are less than units sold.
D)Absorption costing net income exceeds variable costing net income when units produced are greater than units sold.

Question

Quizplus · Accepted Answer

When units produced are greater than units sold, absorption costing net income exceeds variable costing net income because fixed manufacturing overhead costs are deferred in inventory under absorption costing, leading to higher reported net income.

Which of the Following Statements Is TRUE