A Decrease in Inventory Levels Will Cause Which of the Following

question 114

Multiple Choice

A decrease in inventory levels will cause which of the following when comparing net profit under absorption and variable costing?

• A)A lower net profit under variable costing
• B)A lower cost of sales and a higher net profit under absorption costing
• C)The same net profit under both variable costing and absorption costing
• D)A higher net profit under variable costing

---

Definitions:

Coordinate System

A system of geometry where the position of points on a plane is described using an ordered pair of numbers.

Quantities

The amounts or levels of a good or service available or required in various contexts, such as in markets or in production processes.

Prices

Amounts of money required to purchase goods or services, acting as an indicator of the value placed on those goods or services by the market.

Department of Labor

A federal department responsible for promoting the welfare of job seekers, wage earners, and retirees in the United States by improving their working conditions, advancing their opportunities for profitable employment, protecting their retirement and healthcare benefits, and ensuring workplace safety.