When unit sales are constant, but the number of units produced fluctuates and everything else remains the same, net operating income under variable costing will:
A) fluctuate in direct proportion to changes in production.
B) remain constant.
C) fluctuate inversely with changes in production.
D) be greater than net operating income under absorption costing.

Question

Quizplus · Accepted Answer

Under variable costing, net operating income is affected by sales volume and not by the number of units produced. Since unit sales are constant and everything else remains the same, net operating income will remain constant regardless of changes in production levels.

When Unit Sales Are Constant, but the Number of Units