A firm presently has total sales of $100,000.If its sales rise,its
A)net income based on variable costing will go up more than its net income based on absorption costing.
B)net income based on absorption costing will go up more than its net income based on variable costing.
C)fixed costs will also rise.
D)per unit variable costs will rise.

Question

Quizplus · Accepted Answer

Net income based on variable costing will go up more than its net income based on absorption costing because variable costing only considers variable costs in calculating net income, while absorption costing considers both variable and fixed costs. As sales rise, the increase in variable costs will be less than the increase in sales, resulting in a higher net income under variable costing compared to absorption costing.

A Firm Presently Has Total Sales of $100,000