If the Unit Level of Inventory Increases During an Accounting

question 138

Multiple Choice

If the unit level of inventory increases during an accounting period, then ________.

• A) less operating income will be reported under absorption costing than variable costing
• B) more operating income will be reported under absorption costing than variable costing
• C) operating income will be the same under absorption costing and variable costing
• D) the exact effect on operating income cannot be determined

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Definitions:

Ad Hoc Committee

A temporary committee formed for a specific task or objective and dissolved after the completion of its mandate.

Specific Business

Pertains to a particular company, industry, or commercial enterprise that is identified or distinguished by unique characteristics.

Filibustering

A legislative tactic used to prolong debate and delay or block a vote on a proposal.

Structure

The organization or arrangement of parts, elements, or components of something, forming a coherent whole.