Profit will be the same under variable costing as under full absorption costing whenever
A)production is greater than sales.
B)production is the same as sales.
C)production is less than sales.
D)variable costing is chosen for external reporting purposes.

Question

Quizplus · Accepted Answer

Profit will be the same under variable costing as under full absorption costing when production is equal to sales. This is because the only difference between the two methods is the way fixed manufacturing overhead costs are allocated to units of production. When production equals sales, there is no difference in the allocation of fixed manufacturing overhead costs between the two methods, resulting in the same amount of profit.

Profit Will Be the Same Under Variable Costing as Under