When Production Is Greater Than Sales,the Operating Income Will Be

question 134

Multiple Choice

When production is greater than sales,the operating income will be higher under absorption costing than variable costing.Assume zero 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 ending 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 profits.

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Definitions:

Input Metric

An indicator or measure used to assess specific aspects or performance within a system or process.

New-Product Pipeline

The process and stages that a new product goes through from conception to commercialization, including ideation, development, and launch.

Innovation

The process of creating new ideas, products, or methods, which bring about significant improvements or competitive advantage.

Product-Development

The process of bringing a new product or service to the market, from the initial idea through design, development, testing, and launch.