When the units sold are greater than the units produced,variable costing income is ________ absorption costing income.When the units sold are less than the units produced,variable costing income is ________ absorption costing income.
A) equal to; equal to
B) less than; greater than
C) greater than; less than
D) cannot be determined; cannot be determined

Question

Quizplus · Accepted Answer

In variable costing, fixed manufacturing costs are treated as period expenses and not included in the product cost. Therefore, if the units sold are greater than the units produced, variable costing income will be greater than absorption costing income because fewer fixed costs will be allocated to each unit. Conversely, if the units sold are less than the units produced, variable costing income will be less than absorption costing income because more fixed costs will be allocated to each unit.

When the Units Sold Are Greater Than the Units Produced,variable