Which of the Following Will Cause Income Determined with Absorption

question 66

Multiple Choice

Which of the following will cause income determined with absorption costing to be higher than income determined with direct costing?

• A)units produced equal units sold.
• B)units produced are greater than units sold.
• C)units produced are less than units sold.
• D)income determined with absorption costing will always equal income determined with direct costing.

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Definitions:

Total Compensation Costs

The complete range of costs incurred by an employer to provide wages, salaries, and all other employee benefits and perks.

Employee Benefits

Various types of non-wage compensation provided to employees in addition to their normal salaries or wages.

Pay Package

The total compensation provided to an employee, including salary, bonuses, benefits, and any other financial rewards.

Base Pay

The initial rate of compensation that an employee receives in exchange for their services, excluding any bonuses, benefits, or raises.