When there are no beginning or ending balances in Finished Goods Inventory,variable and absorption costing will result in ________.
A) different amounts for ending Finished Goods Inventory
B) the same operating income
C) different sales revenue
D) different amounts for cost of goods sold

Question

Quizplus · Accepted Answer

When there are no beginning or ending balances in Finished Goods Inventory, variable and absorption costing will result in the same operating income. This is because the difference between the two methods lies in the way fixed manufacturing overhead costs are allocated to units of production and carried in inventory, but with no beginning or ending inventory values, there will be no fixed manufacturing overhead costs to allocate. As a result, there will be no difference in the operating income calculated under the two methods.

When There Are No Beginning or Ending Balances in Finished