In a period where production exceeds sales, variable costing results in lower per unit product costs and lower operating income.

Question

Quizplus · Accepted Answer

Variable costing does not consider fixed costs in the calculation of unit product costs. In a period where production exceeds sales, fixed costs are allocated to fewer units, resulting in higher per unit product costs under absorption costing. Therefore, variable costing results in lower per unit product costs and lower operating income in such a period.

In a Period Where Production Exceeds Sales, Variable Costing Results