When monthly production volume and sales are the same, ____.
A) absorption income equals variable income
B) absorption income is greater than variable income
C) the cost of goods sold equals miscellaneous expenses
D) the cost of goods sold is greater than miscellaneous expenses

Question

Quizplus · Accepted Answer

When monthly production volume and sales are the same, there is no inventory left over, and all costs are expensed in the period incurred. This means that absorption income will be equal to variable income because there are no fixed costs to absorb into inventory. Therefore, the best choice is A, absorption income equals variable income.

When Monthly Production Volume and Sales Are the Same, ____