When Production Exceeds Sales and the Company Uses the LIFO

question 217

Multiple Choice

When production exceeds sales and the company uses the LIFO inventory flow assumption, the net operating income reported under absorption costing generally will be:

• A)less than net operating income reported under variable costing.
• B)greater than net operating income reported under variable costing.
• C)equal to net operating income reported under variable costing.
• D)higher or lower because no generalization can be made.

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Definitions:

Circadian Rhythm

The roughly 24-hour cycle in the physiological processes of living beings, influencing sleep-wake patterns, hormone release, and other bodily functions.

Diurnal

Pertaining to or active during the day, as opposed to nocturnal.

Nocturnal

Pertaining to or active during the night.