A company using lean production methods likely would show approximately the same net operating income under both absorption and variable costing because:
A)ending inventory would be valued in the same manner for both methods under lean production.
B)production is geared to sales under lean production and thus there would be little or no ending inventory.
C)under lean production fixed manufacturing overhead costs are charged to the period incurred rather than to the product produced.
D)there is no distinction made under lean production between fixed and variable costs.

Question

Quizplus · Accepted Answer

Lean production involves producing goods in a way that minimizes waste and efficiently meets customer demand. This means that production is typically geared towards sales, resulting in little or no ending inventory. Therefore, there would be no difference in net operating income calculation between absorption and variable costing, as ending inventory valuation would not be a factor.

A Company Using Lean Production Methods Likely Would Show Approximately