For the year in question, one would expect the net operating income under absorption costing to be:
A)higher than the net operating income under variable costing.
B)lower than the net operating income under variable costing.
C)the same as the net operating income under variable costing.
D)the relation between absorption costing and variable costing net operating incomes cannot be determineD.Manufacturing exceeds sales, so absorption costing net operating income will exceed variable costing net operating income.

Question

Quizplus · Accepted Answer

When manufacturing exceeds sales, some fixed manufacturing overhead costs are deferred in inventory under absorption costing, leading to higher net operating income compared to variable costing.

For the Year in Question, One Would Expect the Net