If the Number of Units Produced Is Less Than the Number

question 66

Multiple Choice

If the number of units produced is less than the number of units sold,which of the following statements is true when comparing operating profit under absorption versus variable costing?

• A)Sales revenue will be less when absorption costing is used.
• B)Absorption costing will produce a higher operating profit.
• C)Operating profit is the same under both methods.
• D)Variable costing will produce a higher operating profit.
• E)None of the answer choices is correct.

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Definitions:

Drought

An extended period of deficient rainfall relative to the statistical multi-year average for a region, resulting in water scarcity.

Tar Content

The amount of tar, a toxic substance, that is produced and released by burning products, such as cigarettes.

Normally Distributed

A balanced probability distribution around the mean, underscoring that events happening close to the mean are more common than distant events.

Low Tar

A term often used in tobacco product descriptions indicating a lower content of tar compared to regular products.