When the
A)ending inventory on the balance sheet is lower under absorption costing than under variable costing.
B)ending inventory on the balance sheet is higher under absorption costing than under variable costing.
C)ending inventory on the balance sheet is the same under absorption costing and variable costing.
D)cannot be determined with the information given.

Question

Quizplus · Accepted Answer

Absorption costing includes fixed overhead costs in the cost of inventory, resulting in a higher cost per unit compared to variable costing. As a result, the value of ending inventory on the balance sheet will be higher under absorption costing compared to variable costing.