A manager can increase income under absorption costing by increasing:
A)variable costs.
B)production.
C)fixed costs.
D)leased assets.

Question

Quizplus · Accepted Answer

Under absorption costing, income is calculated by adding both variable and fixed manufacturing overhead costs to the cost of goods produced. As production increases, fixed costs can be spread out over more units, resulting in a lower per-unit cost of fixed overhead. Therefore, increasing production can increase income under absorption costing. Increasing variable costs or fixed costs without a corresponding increase in production will likely result in a decrease in income. Leased assets are not directly related to the calculation of income under absorption costing.

A Manager Can Increase Income Under Absorption Costing by Increasing