Assuming That the Number of Units Produced Is Less Than

question 102

Multiple Choice

Assuming that the number of units produced is less than the number of units sold, which of the following statements is true when comparing net operating income using absorption and variable costing?

• A) Absorption costing will yield a higher net operating income.
• B) Variable costing will yield a higher net operating income.
• C) Net operating income will be the same under both methods.
• D) The sales price per unit will be less using absorption costing.

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Definitions:

Independent Variable

A variable in an experiment or analysis that is manipulated or categorized to observe its effect on a dependent variable.

Dependent Variable

The variable in an experiment that is expected to change as a result of manipulations of the independent variable.

Hydroxide ions

Negatively charged ions made up of one oxygen and one hydrogen atom, symbolized as OH-.

Alkaline Solution

A solution with a pH value greater than 7, indicating it has fewer hydrogen ions than pure water and is commonly referred to as basic.