Managers can increase operating profit when absorption costing is used by producing more inventory.

Name: Managers can increase operating profit when absorption costing is used by producing more inventory.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

When absorption costing is used, fixed overhead costs are included in the cost of goods sold. Therefore, producing more inventory will spread these fixed costs over a larger number of units, reducing the cost per unit and increasing operating profit.

Managers Can Increase Operating Profit When Absorption Costing Is Used