Net operating income computed under variable costing would exceed net operating income computed using absorption costing if: Multiple Choice units sold are less than units produced. the average fixed cost per unit is zero. units sold equal units produced. units sold exceed units produced.

Question

Jair Sweeney

Business

6 September, 08:00

Net operating income computed under variable costing would exceed net operating income computed using absorption costing if: Multiple Choice units sold are less than units produced. the average fixed cost per unit is zero. units sold equal units produced. units sold exceed units produced.

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Answers (1)

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Shannon Owen · Answer 1

Units sold exceeds units produced

Explanation:

The net operating income under variable costing system is always higher than absorption costing system when units sold exceeds units produced. As variable cost doesn't include fixed manufacturing overhead unlike absorption costing, when the net operating income under it now exceed that of absorption, it's definitely am increase in sales that's responsible for that.