If the Number of Units Produced Exceeds the Number of Units

question 156

Multiple Choice

If the number of units produced exceeds the number of units sold,then net operating income under absorption costing will:

• A)be equal to the net operating income under variable costing.
• B)be greater than net operating income under variable costing.
• C)be equal to the net operating income under variable costing plus total fixed manufacturing costs.
• D)be equal to the net operating income under variable costing less total fixed manufacturing costs.

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Definitions:

Cost of Goods Sold

An accounting term referring to the direct costs attributable to the production of the goods sold by a company, including materials and labor.

Balance Sheet

A financial statement that reports a company's assets, liabilities, and shareholders' equity at a specific point in time.

Spreadsheet

A digital document comprised of rows and columns, used to organize, calculate, and manage data, commonly through software like Microsoft Excel or Google Sheets.

Job-Order Costing

An accounting system that tracks costs individually for each job, suitable for custom or unique product manufacturing.