Under variable costing, net income can be increased by increasing production without increasing sales.

Question

Quizplus · Accepted Answer

Under variable costing, net income is not directly affected by changes in production levels because fixed manufacturing overhead is treated as a period cost and expensed in the period incurred, not included in product costs. Therefore, increasing production without increasing sales does not increase net income.

Under Variable Costing, Net Income Can Be Increased by Increasing