How is operating income affected if the number of units sold exceeds the number of units produced?
A)Operating income would be higher under a variable costing income statement.
B)Operating income would be lower under a variable costing income statement.
C)Operating income would be higher under an absorption costing income statement.
D)Operating income would be the same under both a variable costing and absorption costing income statement.

Question

Quizplus · Accepted Answer

When units sold exceed units produced, variable costing shows higher operating income because all fixed manufacturing costs are expensed, while absorption costing defers some fixed costs in inventory.

How Is Operating Income Affected If the Number of Units