Purchases = Sales units + Closing inventory - Beginning Inventory
= 7,400 + (2,400 * 120%) - 2,400
= 7,800 units
Answer: A.exceed units sold
Explanation:
In Absorption Costing, All costs be it Fixed or Variable that are directly related to production are considered when computing the Cost of Production.
Under Variable Costs however, only variable Costs are considered for the computing of Cost of Production.
This difference in consideration of costs under each method leads to difference in income determination under each method.
Under Absorption Costing, fixed manufacturing costs are apportioned on produced units and the costs are only recovered when the units are sold but under variable costing, fixed manufacturing costs are treated as period costs and are therefore charged to the Income statement.
This means that, the amount of income under absorption costing will be more than the amount of income under variable costing when units manufactured exceed units sold.
I don’t understand this question
Because opportunity cost is the value of something else you might have done with that time or money that you expended there.
hope this helps!
