Which of the following conditions would cause absorption-costing income to be higher than variable-costing income?
A) Units sold exceeded units produced.
B) Units sold equaled units produced.
C) Units sold were less than units produced.
D) Sales prices decreased.
E) Selling expenses increased.

Question

Quizplus · Accepted Answer

Under absorption costing, fixed manufacturing overhead is allocated to each unit produced. Therefore, when units produced exceed units sold, some of the fixed manufacturing overhead costs are included in the ending inventory and not expensed in the current period. This deferral of expense increases the absorption-costing income compared to variable-costing income, where all fixed manufacturing overhead costs are expensed in the period they are incurred, regardless of the level of production or sales.

Which of the Following Conditions Would Cause Absorption-Costing Income to Be