Operating Income Reported Under Absorption Costing Will Generally Exceed Operating

question 73

Multiple Choice

Operating income reported under absorption costing will generally exceed operating income reported under variable costing for a given period in which of the following cases?

• A) If production equals sales for that period.
• B) If production exceeds sales for that period.
• C) If sales exceed production for that period.
• D) If the variable manufacturing overhead exceeds the fixed manufacturing overheaD.

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Definitions:

Least Elastic

Describes a situation where there is the smallest responsiveness of the quantity demanded or supplied to changes in price, typically associated with goods and services for which there are no close substitutes.

Price Sensitive

A term describing how the demand for a product changes in response to price changes; consumers are highly reactive to changes in price.

Elastic Demand

A situation in which the demand for a product or service significantly changes in response to a change in its price.

Elasticity of Demand

A measure of how responsive the quantity demanded of a good or service is to a change in its price.