For a period during which the quantity of product manufactured equals the quantity sold,income from operations reported under absorption costing will equal the income from operations reported under variable costing.

Question

Quizplus · Accepted Answer

When the quantity of product manufactured equals the quantity sold, there is no change in inventory levels, and therefore, the fixed manufacturing overhead costs that were incurred during the production process are matched directly with the revenue earned from the sale of the product. As both absorption costing and variable costing methods include the variable costs of production, the income from operations reported under both methods will be the same. Therefore, the statement is true.

For a Period During Which the Quantity of Product Manufactured