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

When units sold are less than units produced, absorption costing income will be higher than variable costing income because fixed manufacturing costs are expensed in the period of production under absorption costing, while they are deferred to future periods under variable costing. This results in a higher per-unit cost and higher income under absorption costing if fewer units are sold.

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