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Samantha Paone
on Nov 12, 2024

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When units manufactured exceed units sold, variable costing income

A) equals absorption costing income
B) is less than absorption costing income
C) is greater than absorption costing income
D) is greater by the number of units produced multiplied by the variable cost ratio

Variable Costing Income

An income calculation method that only includes variable costs - costs that fluctuate with production levels - in determining net income.

Absorption Costing Income

A company's income statement approach which includes all costs of production (both fixed and variable) in the cost of goods sold, thereby fully absorbing them.

Variable Cost Ratio

The proportion of variable costs to sales, showing the impact of production volume on total costs.

  • Identify the distinctions between variable and absorption costing techniques and their influences on financial reporting and managerial decisions.
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yogesh chunaraNov 19, 2024
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