When all of the units produced are sold,the operating income will be the same under both the costing methods.(Assume no beginning inventories.)Which of the following gives the correct reason for the above statement?
A)all costs incurred have been recorded as expenses
B)a portion of the fixed manufacturing overhead is still in the Finished Goods Inventory account
C)all selling and administrative expenses have been recorded as period costs
D)fixed manufacturing costs have not been considered while calculating the operating profits

Question

Quizplus · Accepted Answer

The statement is true because when all units are sold, all of the costs incurred in the production of those units will have been allocated to the products and recognized as expenses. Therefore, the operating income will be the same under both costing methods.

When All of the Units Produced Are Sold,the Operating Income