Analysts must be aware that with the use of absorption costing,as inventory absorbs more fixed costs,reported net income tends to
A)increase.
B)decrease.
C)remain the same.
D)become highly volatile.

Question

Quizplus · Accepted Answer

With absorption costing, fixed overhead costs are included in the cost of inventory, which means that as inventory levels increase, more fixed costs are being absorbed. As a result, reported net income tends to increase.

Analysts Must Be Aware That with the Use of Absorption