Net Operating Income Reported Under Absorption Costing Will Exceed Net

question 161

Multiple Choice

Net operating income reported under absorption costing will exceed net operating income reported under variable costing for a given period if:

• A)production equals sales for that period.
• B)production exceeds sales for that period.
• C)sales exceed production for that period.
• D)the variable manufacturing overhead exceeds the fixed manufacturing overhead.

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Definitions:

Vested Benefits

Benefits that an employee has earned the right to receive, even if they no longer work for the employer, typically in a pension or retirement plan.

Postretirement Health Care Benefits

Benefits provided by an employer to retired employees, covering medical and health-related expenses.

Tax Deductible

Expenses or costs that can be subtracted from gross income to reduce the taxable income.

ERISA

The Employee Retirement Income Security Act of 1974, a federal law that sets minimum standards for most voluntarily established retirement and health plans in private industry.