When inventory increases under absorption costing it absorbs more fixed cost and increases net income.

Name: When inventory increases under absorption costing it absorbs more fixed cost and increases net income.
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Question

Quizplus · Accepted Answer

When inventory increases under absorption costing, more fixed cost is allocated to the inventory cost and therefore absorbed into the cost of goods sold. This results in a decrease in the fixed cost per unit and an increase in net income.

When Inventory Increases Under Absorption Costing It Absorbs More Fixed