When the number of units sold is equal to the number of units produced, the net income using absorption costing will be
A)greater than net income using variable costing.
B)equal to net income using variable costing.
C)less than net income using variable costing.
D)None of the answer choices is always correct.

Question

Quizplus · Accepted Answer

When the number of units sold is equal to the number of units produced, the ending inventory will be zero. In this case, the net income under absorption costing and variable costing will be the same as all the fixed manufacturing costs will be allocated to the cost of goods sold under absorption costing, and there won't be any difference in fixed costs between the beginning and ending inventory. Therefore, the answer is B, equal to net income using variable costing.

When the Number of Units Sold Is Equal to the Number