Assuming That the Number of Units Produced Is Less Than

question 105

Multiple Choice

Assuming that the number of units produced is less than the number of units sold,which of the following statements is true when comparing net income using absorption and variable costing?

• A) Absorption costing will yield a higher net income.
• B) Variable costing will yield a higher net income.
• C) Net income will be the same under both methods.
• D) The sales price per unit will be less using absorption costing.

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Definitions:

Anticompetitive Effects

Negative impacts on market competition, such as reduced consumer choice or higher prices, often resulting from monopolistic practices or mergers.

Financial Mergers

The combining of two or more financial entities or assets into one, with the aim of creating efficiencies or achieving financial goals.

Acquiring Company

A company that purchases most or all of another company's shares to gain control of that company.

Target Company's Business

Refers to the primary operations, sector, and market activities of a company that is the subject of a takeover or acquisition.