Income ________ When There Is Zero Beginning Inventory and All

question 102

Multiple Choice

Income ________ when there is zero beginning inventory and all inventory units produced are sold.

• A)Will be lower under variable costing than absorption costing
• B)Will be the same under both variable and absorption costing
• C)Will be higher under variable costing than absorption costing
• D)Will be higher than gross margin under variable costing
• E)Will be lower than administrative costs under absorption costing

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Definitions:

Purchase Discounts

Reductions in the purchase price of goods, usually provided by a supplier to the buyer for early payment or bulk buying.

Net Price Method

A pricing strategy that considers the net cost of a product after deducting any discounts or allowances.

Gross Price Method

A pricing approach where the price of goods or services is determined without deducting any trade discounts or allowances.