When All of the Units Produced Are Sold,the Operating Income

question 162

Multiple Choice

When all of the units produced are sold,the operating income is the same under both the absorption and variable costing methods.Assume no beginning and ending 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 Finished Goods Inventory account.
• C) All selling and administrative expenses have been recorded as period costs.
• D) Fixed manufacturing costs have not been considered when calculating the operating incomes.

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Definitions:

Defined Benefit Plan

A pension plan where an employer promises a specified pension payment upon retirement, calculated based on the employee's earnings history, tenure of service, and age.

Retirement Accounts

Financial accounts that offer tax benefits and are specifically designed to save and invest for retirement.

Lump Sum Amount

A single payment made for a particular purpose, rather than payments made in installments.

Employee Retirement Income Security Act

A federal law that sets minimum standards to ensure that voluntary, private industry pension and health plans are established and maintained in a fair and financially sound manner.