When Comparing the Operating Incomes Between Absorption Costing and Variable

question 101

Multiple Choice

When comparing the operating incomes between absorption costing and variable costing, and ending finished inventory exceeds beginning finished inventory, it may be assumed that ________.

• A) sales decreased during the period
• B) variable cost per unit is more than fixed cost per unit
• C) there is a favorable production-volume variance
• D) absorption costing operating income exceeds variable costing operating income

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Definitions:

Coefficient of Determination

A statistical measure, often denoted as R², indicating the proportion of the variance in the dependent variable predictable from the independent variable(s).

Independent Variables

Variables in an analysis that are manipulated or categorized to determine their effect on dependent variables.

Variation

The measure of the spread or dispersion of a set of values in a particular dataset or sampling.

Coefficient of Determination

A measure used in statistical analysis that assesses the goodness of fit of a model.