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:

Consistency

In accounting, the principle that mandates the use of the same accounting methods and practices over time for financial reporting.

Qualitative Characteristics

Aspects that contribute to the usefulness of financial information, including its relevance and reliability.

Financial Statements

Formal records of the financial activities and position of a business, person, or other entity, presenting the financial performance and position at a given period.