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:

Anterograde Amnesia

A condition where an individual is unable to form new memories following the onset of an amnesia-causing event, although memories from before the event remain intact.

Hippocampus

A part of the brain involved in forming, organizing, and storing memories.

Temporal Areas

Regions of the brain located on the sides of the cerebral hemisphere, involved in processing auditory information and memory.

Anterograde Amnesia

A condition characterized by the inability to form new memories following the onset of the disorder, while long-term memories from before the condition remains intact.