If the Unit Level of Inventory Increases During an Accounting

question 138

Multiple Choice

If the unit level of inventory increases during an accounting period, then ________.

• A) less operating income will be reported under absorption costing than variable costing
• B) more operating income will be reported under absorption costing than variable costing
• C) operating income will be the same under absorption costing and variable costing
• D) the exact effect on operating income cannot be determined

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Definitions:

Neighborhood Quality

The overall assessment of an area based on factors like safety, cleanliness, community services, and the physical environment.

Square Footage

A measure of area used primarily in the United States, calculated by multiplying the length and width of a space in feet.

Satisfaction

The feeling of pleasure or fulfillment arising from achieving or obtaining what was desired or expected.

Status Quo Bias

Status quo bias is the tendency to prefer things to remain the same or to prefer options that are perceived as the current or default state.