When units produced exceeds units sold
A)net income under absorption costing is higher than net income under variable costing.
B)net income under absorption costing is lower than net income under variable costing.
C)net income under absorption costing equals net income under variable costing.
D)the relationship between net income under absorption costing and net income under variable costing cannot be predicted.

Question

Quizplus · Accepted Answer

When units produced exceed units sold, net income under absorption costing is higher than under variable costing because fixed manufacturing overhead costs are deferred in inventory under absorption costing, rather than being fully expensed in the period under variable costing.

When Units Produced Exceeds Units Sold