When Monthly Production Volume Is Constant and Sales Volume Is

question 54

Multiple Choice

When monthly production volume is constant and sales volume is less than production,how will net income determined with variable costing procedures compare to net income determined with absorption costing?

• A)Net income determined with variable costing will always be greater than net income determined using absorption costing.
• B)Net income determined with variable costing will always be less than net income determined using absorption costing.
• C)Net income determined with variable costing will be equal to net income determined using absorption costing.
• D)Net income determined with variable costing will be equal to contribution margin per unit times units sold.

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Definitions:

Employment

A relationship between an employer and an employee where the employee provides labor in exchange for compensation under agreed terms.

Warranty Expense

Costs anticipated by a company for the repair or replacement of defective products during the warranty period, treated as a liability until used.

Estimated Cost

A projection or forecast of the total costs associated with completing a project, manufacturing a product, or providing a service.

FICA Taxes

Taxes imposed on both employees and employers to fund Social Security and Medicare in the United States.