The following information pertains to Mayberry Corporation:
-Absorption costing net income would be _______________ variable costing net 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:  
-Absorption costing net income would be _______________ variable costing net 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, absorption costing net income will be higher than variable costing net income by the amount of fixed overhead deferred in inventory.

The Following Information Pertains to Mayberry Corporation