Assuming That the Number of Units Produced Is Greater Than

question 95

Multiple Choice

Assuming that the number of units produced is greater 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) Sales revenue will be less using absorption costing.

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Definitions:

Financial Statement Analysis

The process of evaluating financial statements and related data to understand the financial health of an organization and make informed business decisions.

Trend Analysis

The practice of collecting information and trying to spot a pattern, often used in technical analysis of financial markets or analysis of historical data in various fields.

Causal Relationship

A connection between two variables where a change in one directly causes a change in the other.