A company's operating income recently increased by 30% while its inventory increased in a given year. Which of the following accounting methods would produce the most favorable income results?

Question

Quizplus · Accepted Answer

Full costing (also known as absorption costing) includes all manufacturing costs, both fixed and variable, in the cost of a product. When inventory increases, some fixed manufacturing costs are deferred in inventory, resulting in higher operating income compared to variable costing methods.

A Company's Operating Income Recently Increased by 30% While Its