When the number of units produced exceeds the number of units sold,absorption costing defers some of the fixed costs incurred.

Name: When the number of units produced exceeds the number of units sold,absorption costing defers some of the fixed costs incurred.
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Quizplus · Accepted Answer

This is because absorption costing allocates fixed overhead costs to units produced, which means that when units produced exceed units sold, some fixed costs are recorded in inventory rather than being expensed in the period they were incurred.

When the Number of Units Produced Exceeds the Number of Units