Which of the Following Is True Concerning Operating Income Calculated

question 118

Multiple Choice

Which of the following is true concerning operating income calculated under variable costing as compared to absorption costing?

• A) Operating income is lower under variable costing when production exceeds sales.
• B) Operating income is higher under variable costing when production exceeds sales.
• C) Operating income is lower under variable costing when sales exceeds production only if there is a production-volume variance.
• D) operating income is higher under variable costing when production exceeds sales only if there is a production-volume variance.
• E) The relationship between production and sales has no bearing on the differences in operating income between the two methods.

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Definitions:

Hypothesis

A proposed explanation for a phenomenon, made as a starting point for further investigation, testing, or experimentation.

Informative

Providing useful or important information or details.

Assumptions

Statements or ideas accepted as true without proof, used as the basis for reasoning or argumentation.

Explanandum

The phenomenon or event that is to be explained, often used in the context of scientific inquiry.