Question

"when the number of units produced exceeds the number of units sold, net income under absorption costing will be:"

Answer 1

The answer is that the net income under absorption costing would be higher than the net income under variable costing.

Step-by-step explanation:

Absorption costing and variable costing are terms used in accounting contexts. Absorption costing, also known as full costing, incurs overhead costs when the product is sold; not before it. Variable costing, also referred to as direct costing, would include overhead costs during the period the costs occurred. In this condition, net income would be higher using absorption since overhead costs would not be included until the product is sold.