For a period during which the quantity of product manufactured was less than the quantity sold,income from operations reported under absorption costing will be larger than income from operations reported under variable costing.

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Quizplus · Accepted Answer

Under absorption costing, fixed manufacturing overhead is included in the cost of goods sold, so if production is less than sales, some fixed costs remain in inventory, reducing expenses and increasing income. Under variable costing, all fixed costs are expensed in the period incurred, leading to lower income when production is less than sales.

For a Period During Which the Quantity of Product Manufactured