Which of the following statements is
A) Under absorption costing some fixed manufacturing costs are deferred in ending inventory if production is lower than sales.
B) When production and sales are equal,net income will be greater under variable costing than it will be under absorption costing.
C) Under absorption costing only the fixed manufacturing cost associated with inventory produced are expensed.
D) Under variable costing fixed manufacturing costs are expensed in the period in which they are incurred regardless of when the inventory is sold.

Question

Quizplus · Accepted Answer

Under variable costing, fixed manufacturing costs are expensed in the period in which they are incurred regardless of when the inventory is sold. A is incorrect because under absorption costing, all fixed manufacturing costs are included in the cost of goods sold, not deferred in ending inventory. B is incorrect because net income will be the same under both variable and absorption costing when production and sales are equal. C is incorrect because under absorption costing, all fixed manufacturing costs associated with production are included in the cost of goods sold, not just those associated with inventory produced.

Which of the Following Statements Is