When There Are No Units in the Beginning Finished Goods

question 64

True/False

When there are no units in the beginning finished goods inventory and the units produced are more than the units sold,the operating income will be higher under variable costing than absorption costing.

---

Definitions:

Conversion Cost

The combined costs of direct labor and overhead expenses incurred to convert raw materials into finished products.

Equivalent Unit

A measure used in cost accounting to express the amount of work done on partially completed goods in terms of fully completed units.

Factory Overhead

Indirect manufacturing costs that are not tied directly to specific units of product, such as maintenance, utilities, and rent of a factory.

Direct Labor

Direct labor refers to the wages paid to workers who are directly involved in the production of goods or services, such as assembly line workers.