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When there are no units in the beginning Finished Goods Inventory and the units produced are...

When there are no units in the beginning Finished Goods Inventory and the units produced are more than the units​ sold, the operating income will be higher under variable costing than absorption costing.

True

False

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Answer #1

Answer: False

If the Units Produced is More than the Units Sold, we Have Ending inventory,

  • Net operating Under Variable costing is Less than the Absorption Costing Net operating income

Under Variable cost Fixed Manufacturing overheads are Considered as a Period Cost so total Fixed Manufacturing overheads Cost are Reduced Form the Revenues, But under Absorption costing it is considered as a product cost so ending inventory fixed Manufacturing overheads cost will be deferred so it leads to More net income under Absorption costing and Less Net income under the Variable costing and

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