Identify if true or false 1. If the ending inventories happened to be zero, the net profit reported under absorption costing will be greater than reported under variable costing 2. The primary reason of variances in net operating income under variable costing and absorption costing is the change in fixed cost 3. When inventory increases, the net operating income under absorption costing decreases 4. When inventory decreases, the net operating income under absorption costing is ALWAYS lower than of variable costing. 5.When inventory decreases the fixed manufacturing overhead is deferred in inventory. 6. The change in production does not affect net operating income under variable costing system. *
Identify if true or false 1. If the ending inventories happened to be zero, the net profit reported under absorption costing will be greater than reported under variable costing 2. The primary reason of variances in net operating income under variable costing and absorption costing is the change in fixed cost 3. When inventory increases, the net operating income under absorption costing decreases 4. When inventory decreases, the net operating income under absorption costing is ALWAYS lower than of variable costing. 5.When inventory decreases the fixed manufacturing overhead is deferred in inventory. 6. The change in production does not affect net operating income under variable costing system. *
Chapter6: Activity-based, Variable, And Absorption Costing
Section: Chapter Questions
Problem 20MC: Product costs under variable costing are typically: A. higher than under absorption costing B. lower...
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Identify if true or false
1. If the ending inventories happened to be zero, the net profit reported under absorption costing will be greater than reported under variable costing
2. The primary reason of variances in net operating income under variable costing and absorption costing is the change in fixed cost
3. When inventory increases, the net operating income under absorption costing decreases
4. When inventory decreases, the net operating income under absorption costing is ALWAYS lower than of variable costing.
5.When inventory decreases the fixed manufacturing overhead is deferred in inventory.
6. The change in production does not affect net operating income under variable costing system. *
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