Question

When there is no beginning Finished Goods Inventory and all the goods that are produced are sold, the operating income ________. a. will be higher under absorption costing dan variable costing b. will be higher than the gross profit under variable costing c. will be the same for both absorption costing and variable costing d. will be lower under absorption costing than variable costing

Answer 1

Answer:

C) will be the same for both absorption costing and variable costing

Explanation:

If the beginning and ending balance for Finished Goods Inventory is 0, that means that all the absorption costs have been assigned and all the fixed costs (for variable costing) have been assigned also. So whatever costing method you choose the valuation should be the same.