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When production units is greater than sales units , absorption costing net income will be:

A- greater than variable costing net income B- equal to variable costing net income C- lower than variable costing net income D- there are not relation between two methods

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تم إضافة السؤال من قبل Ahmed kandil , Cost Controller , Battour Holding Cpompany
تاريخ النشر: 2015/03/21
Sara Khan
من قبل Sara Khan , financial and admin assistant , Ministry Of Defence

Option A- greater than variable costing net income..................

VENKITARAMAN KRISHNA MOORTHY VRINDAVAN
من قبل VENKITARAMAN KRISHNA MOORTHY VRINDAVAN , Project Execution Manager & Accounts Manager , ALI INTERNATIONAL TRADING EST.

The ending inventory figures under the variable costing and absorption costing methods are different. Under variable costing, only the variable manufacturing costs are included in inventory. Under absorption costing, both variable and fixed manufacturing costs are included in inventory.

 

Answer option A.>>>>>>>greater than variable costing net income

Muhammad Ramzan Tufail  ACCA
من قبل Muhammad Ramzan Tufail ACCA , Assistant Finance Manager , Eltizam Asset Management Group

(A) is the Correct Ans.

 

Greater than net income under variable costing. 

Absorption costing could result in an increase in net income if a company increases its production and its inventory. This occurs because fixed manufacturing overhead is allocated to more production units—some of which will be reported as inventory

 

A- greater than variable costing net income

Mohammed Shahid Ullah
من قبل Mohammed Shahid Ullah , Executive Director (Finance) , Coal Power Generation Company Bangladesh Limited

Production units and sales units are not any relation between two methods of calculating net income.

Anas  Dawah
من قبل Anas Dawah , Senior Internal Auditor , Talal Abu-Ghazaleh Global (TAGI)

A-            

Absorption costing income higher than Variable Costing income

Allen Ambo
من قبل Allen Ambo , Finance Manager , Qatar Living for Trade & IT Investment

OPTION A

This is because some of the fixed production over heads that had been absorbed in the inventory will be carried forward as ending inventory and reported in the balance sheet as a current asset. Hence the cost of sales will have less of some fixed production over head costs and a lower reported profit for the period end

Malik Saleem Iqbal
من قبل Malik Saleem Iqbal , Assistant Finance Manager , Ali Zaid Al-Quraishi & Brothers Co LTD

Answer is A, it will be greater

abdelrahman mohamed
من قبل abdelrahman mohamed , محاسب , مركز الجُمان للاستشارات الاقتصادية

the correct answer is (A) ... greater than

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