Question

When units produced are greater than units sold under variable costing, fixed overhead is an expense and results in___________(lower, higher) net income than under absorption costing.

Answer 1

Answer: lower

Explanation:

Variable costing is a method used in accounting whereby the manufacturing overhead will be incurred at the particular period when the product is produced.

In the absorption costing method, the indirect expenses which are the overheads and the direct costs are taken into consideration.

The variable costing helps to solve the issue regarding absorption costing which allows for an increase in income as there is am increase in production.