For a period during which the quantity of product manufactured exceeds the quantity sold, operating income reported under absorption costing will be smaller than operating income reported under variable costing.

Question

Quizplus · Accepted Answer

During a period when the quantity of product manufactured exceeds the quantity sold, operating income reported under absorption costing will be higher than under variable costing because fixed manufacturing overhead costs are deferred in inventory under absorption costing, rather than being expensed in the period incurred as in variable costing.

For a Period During Which the Quantity of Product Manufactured