If sales exceed production,absorption costing net income is less than variable costing net income.

Question

Quizplus · Accepted Answer

Absorption costing assigns fixed manufacturing overhead costs to products, while variable costing only assigns variable manufacturing costs. If sales exceed production, absorption costing will increase the amount of fixed manufacturing overhead costs per unit, resulting in a lower net income compared to variable costing.

If Sales Exceed Production,absorption Costing Net Income Is Less Than