When Comparing the Operating Incomes Between Absorption Costing and Variable

question 98

Multiple Choice

When comparing the operating incomes between absorption costing and variable costing, and beginning finished inventory exceeds ending finished inventory, it may be assumed that

• A)sales increased during the period.
• B)variable cost per unit is less than fixed cost per unit.
• C)absorption costing income exceeds variable costing income.
• D)variable costing income exceeds absorption costing income.
• E)variable costing income equals absorption costing income.

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Definitions:

Average Product

The output per unit of input, such as labor or machinery, typically used in the context of analyzing production efficiency.

Marginal Cost

The increase in total cost that results from producing one additional unit of a good or service.

Total Cost

The total economic cost of production, including both fixed and variable costs.

Average Total Cost

Total cost divided by the number of units produced, representing the cost per unit of output.