Net Operating Income Computed Under Variable Costing Would Exceed Net

question 76

Multiple Choice

Net operating income computed under variable costing would exceed net operating income computed using absorption costing if:

• A) units sold exceed units produced.
• B) units sold are less than units produced.
• C) units sold equal units produced.
• D) the average fixed cost per unit is zero.

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Definitions:

Cost of Goods Sold

Cost of Goods Sold (COGS) is the direct costs attributable to the production of the goods sold in a company, including material and labor expenses.

Cost of Goods Manufactured

The total expense incurred from manufacturing goods, including materials, labor, and overhead, during a specific period.

Capital Expenditures

Capital utilized by a corporation to purchase, improve, and upkeep tangible assets like land, factories, or machinery.

Fixed Assets

Long-term tangible assets used in operations and not intended for resale, such as machinery, buildings, and land.