Asked by Emily Talbot on Jun 25, 2024
Verified
Assuming fixed costs remain constant,and a company produces and sells the same number of units,then income under absorption costing is less than income under variable costing.
Fixed Costs
Costs that do not change with the level of production or sales, such as rent, salaries, and insurance premiums.
Absorption Costing
An accounting method that includes all manufacturing costs, both fixed and variable, in the cost of a product.
Variable Costing
A costing method that includes only variable production costs—direct materials, direct labor, and variable manufacturing overhead—in unit product costs.
- Gain insight into the relationship between production quantities and financial outcomes across various costing methodologies.
Verified Answer
Learning Objectives
- Gain insight into the relationship between production quantities and financial outcomes across various costing methodologies.
Related questions
When Units Produced Equal Units Sold,reported Income Is Identical Under ...
Assuming Fixed Costs Remain Constant,and a Company Produces More Units ...
Assuming Fixed Costs Remain Constant,and a Company Sells More Units ...
When the Number of Units Produced Is Equal to the ...
When There Are Zero Units in Beginning Finished Goods Inventory ...