When units produced equal units sold,reported income is identical under absorption costing and variable costing.

Question

Quizplus · Accepted Answer

This is because there is no difference between absorption costing and variable costing when units produced equal units sold, as there are no beginning or ending inventory balances to be accounted for. Therefore, all costs incurred in producing the units (direct materials, direct labor, and variable and fixed overhead) are expensed as cost of goods sold, resulting in identical reported income under both costing methods.

When Units Produced Equal Units Sold,reported Income Is Identical Under