When the Number of Units Sold Exceed the Number of Units

question 88

Multiple Choice

When the number of units sold exceed the number of units produced,income reported under absorption costing will be lower than variable costing.Which of the following gives the best justification of the above statement?

• A)Income under absorption costing is always less than income reported using variable costing,regardless of the number of units produced.
• B)Income under absorption costing is always more than income reported using variable costing,regardless of the number of units produced.
• C)The fixed overhead cost deferred in ending inventory is greater than the fixed overhead cost recognized from beginning inventory.
• D)The fixed overhead cost deferred in ending inventory is less than the fixed overhead cost recognized from beginning inventory.
• E)Fixed overhead is treated as a period cost under absorption costing.

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Definitions:

Deregulation

The decrease or removal of governmental control in a specific sector, typically implemented to enhance competitive conditions within that sector.

Industrial Policy

Government measures aimed at improving the competitive stance and capabilities of domestic industries.

Extensive Experiments

A thorough or wide-ranging series of tests or investigations conducted to explore a hypothesis or understand a phenomenon better.

Social Regulation

Policies designed to protect Public welfare, including health, safety, and the environment.