When the Number of Units Sold Exceeds the Number of Units

question 179

Multiple Choice

When the number of units sold exceeds the number of units produced, income reported under absorption costing will be lower than variable costing. Which of the following gives the best justification of the above statement?

• A) Income under absorption costing is always less than income reported using variable costing, regardless of the number of units produced.
• B) Income under absorption costing is always more than income reported using variable costing, regardless of the number of units produced.
• C) The fixed overhead cost deferred in ending inventory is greater than the fixed overhead cost recognized from beginning inventory.
• D) The fixed overhead cost deferred in ending inventory is less than the fixed overhead cost recognized from beginning inventory.

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Definitions:

Main Effects

The immediate effect that an independent variable has on a dependent variable within an experimental setup.

Factorial ANOVA

A statistical analysis used to examine the effects of two or more categorical independent variables on one continuous dependent variable.

T-test

A statistical method employed to evaluate if there's a significant difference between the average values of two distinct groups.

Null Hypotheses

A statement positing that no statistical relation or significance exists in a set of given observations.