Which of the following situations would cause variable-costing net income to be lower than absorption-costing net income?
A)Units sold equaled 39,000 and units produced equaled 42,000.
B)Units sold and units produced were both 42,000.
C)Units sold equaled 55,000 and units produced equaled 49,000.
D)Sales prices decreased by $7 per unit during the accounting period.
E)Selling expenses increased by 10% during the accounting period.

Question

Quizplus · Accepted Answer

When units produced exceed units sold, some fixed manufacturing costs are deferred in inventory under absorption costing, leading to higher net income compared to variable costing, where all fixed costs are expensed in the period incurred.

Which of the Following Situations Would Cause Variable-Costing Net Income