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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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Question added by Ahmed kandil , Cost Controller , Battour Holding Cpompany
Date Posted: 2015/03/21
Sara Naeem
by Sara Naeem , Trainee Finance officer , Wah Brass Mill

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

VENKITARAMAN KRISHNA MOORTHY VRINDAVAN
by 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

Deleted user
by Deleted user

Answer  A is the right answer . It will be greater .

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

(A) is the Correct Ans.

 

Greater than net income under variable costing. 

Deleted user
by Deleted user

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

A-            

Absorption costing income higher than Variable Costing income

Allen Ambo
by 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
by Malik Saleem Iqbal , Assistant Finance Manager , Ali Zaid Al-Quraishi & Brothers Co LTD

Answer is A, it will be greater

abdelrahman mohamed
by abdelrahman mohamed , محاسب , مركز الجُمان للاستشارات الاقتصادية

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

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