Which Statement Best Describes the General Relationship Between Inventory Values

question 68

Multiple Choice

Which statement best describes the general relationship between inventory values calculated using the variable costing method and inventory values calculated using the absorption costing method?

• A) They will be equal.
• B) Inventory values calculated using the variable costing method will be less.
• C) Inventory values calculated using the variable costing method will be greater.
• D) Inventory values calculated using the variable costing method will be twice as much.

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Definitions:

Tile Manufacturer

A company specializing in the production of tiles, which are pieces of hard-wearing material such as ceramic, stone, or metal used for covering roofs, floors, walls, or other objects.

Selling Price

The amount charged to customers for goods or services, determining the revenue generated from sales.

Sales Volume

The number of units of a product sold in a particular period, indicative of the level of demand and operational success.

Net Operating Income

A company's income after operating expenses are subtracted but before deducting taxes and interest charges.