Which of the Following Situations Would Cause Variable-Costing Income to Be

question 39

Multiple Choice

Which of the following situations would cause variable-costing income to be higher than absorption-costing income?

• A) Units sold equaled 39,000 and units produced equaled 42,000.
• B) Units sold and units produced were both 42,000.
• C) Units sold equaled 55,000 and units produced equaled 49,000.
• D) Sales prices decreased by $7 per unit during the accounting period.
• E) Selling expenses increased by 10% during the accounting period.

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Definitions:

Investment

The act or method of distributing resources, typically funds, with the aim of earning a return or gaining financial profit.

Capital

Financial assets or the financial value of assets, such as funds held in deposit accounts, as well as the tangible machinery and production equipment used in environments such as factories.

Tangible Capital

Physical assets possessed by a business that are used in producing goods or services, such as buildings or machinery.

Inventory

The total amount of goods or materials contained in a store or factory at any given time.