Operating income reported under full costing will exceed operating income reported under variable costing for a given period if:

Question

Quizplus · Accepted Answer

Full costing includes fixed manufacturing overhead as part of inventory cost, which is only expensed when the inventory is sold. When production exceeds sales, more fixed manufacturing overhead is included in inventory cost, which increases operating income reported under full costing compared to variable costing.

Operating Income Reported Under Full Costing Will Exceed Operating Income