If the number of units produced exceeds the number of units sold,the full-absorption operating profit will be lower than variable costing operating profit.

Question

Quizplus · Accepted Answer

When units produced exceed units sold, full-absorption costing defers some fixed manufacturing costs to inventory, resulting in higher operating profit compared to variable costing, which expenses all fixed costs in the period incurred.

If the Number of Units Produced Exceeds the Number of Units