The following information pertains to Mayberry Corporation:

-Refer to Figure 8-4. Absorption costing income would be ____ variable costing income.
A) $150,000 greater than
B) $150,000 less than
C) $240,000 less than
D) $240,000 greater than

Question

The following information pertains to Mayberry Corporation:
 
-Refer to Figure 8-4. Absorption costing income would be ____ variable costing income.
A) $150,000 greater than 
B) $150,000 less than 
C) $240,000 less than 
D) $240,000 greater than

Quizplus · Accepted Answer

Absorption costing includes fixed manufacturing overhead in inventory costs, which can defer expenses to future periods if inventory increases. If inventory increases, absorption costing income will be higher than variable costing income by the amount of fixed overhead deferred.

The Following Information Pertains to Mayberry Corporation