When Production Is More Than Sales,the Operating Income Will Be

question 28

Multiple Choice

When production is more than sales,the operating income will be higher under absorption costing than variable costing.Assume zero beginning inventories.Which of the following gives the correct reason for the above statement?

• A)all costs incurred have been recorded as expenses
• B)a portion of the fixed manufacturing overhead is still in the ending Finished Goods Inventory account
• C)all selling and administrative expenses have been recorded as period costs
• D)fixed manufacturing costs have not been considered while calculating the operating profits

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