The amount of income under absorption costing will be less than the amount of income under variable costing when units manufactured
A)exceed units sold
B)equal units sold
C)are less than units sold
D)are equal to or greater than units sold

Question

Quizplus · Accepted Answer

Under absorption costing, fixed manufacturing overhead is included in the cost of inventory. When units manufactured are less than units sold, some of the fixed overhead costs from previous periods are released from inventory, increasing expenses and reducing income compared to variable costing.

The Amount of Income Under Absorption Costing Will Be Less