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When will NOI under the variable costing method show higher income than under the absorption costing

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter6: Activity-based, Variable, And Absorption Costing

Section: Chapter Questions

Problem 12Q: What is the primary difference between variable costing and absorption costing?

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Concept explainers

Manufacturing Costs

Manufacturing cost is the total cost of procuring or producing a product. In other words, the manufacturing cost is the cost that an individual or business owner undertakes for the manufacturing of goods.

Question

When will NOI under the variable costing method show higher income than under the absorption costing

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Step 1

Net Operating Income: It is a calculation used to assess the profitability of the business.

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