When reconciling from variable costing income to absorption costing income, if production exceeded sales and LIFO is used, then the
A) Fixed overhead in the beginning inventory is added
B) Fixed overhead in the beginning inventory is deducted
C) Fixed overhead in the ending inventory is added
D) Fixed overhead in the ending inventory is ignored

Question

Quizplus · Accepted Answer

When production exceeds sales, the ending inventory increases. Under absorption costing, fixed overhead costs are included in inventory. Therefore, the fixed overhead in the ending inventory is added to reconcile the income.

When Reconciling from Variable Costing Income to Absorption Costing Income