7) In its first year of business, Greenlam, Inc. produced 600 units and sold 400

Question

7) In its first year of business, Greenlam, Inc. produced 600 units and sold 400 units. If Greenlam uses variable costing. A) its value of ending Finished Goods Inventory reported in the balance sheet will be the same as that reported under absorption costing B) its operating income for the period will be higher than under absorption costing C) its value of ending Finished Goods Inventory reported in the balance sheet will be lower than under absorption costing D) its operating income will be the same as under absorption costing

Explanation / Answer

7) in its first year of bussiness, Greenlam, Inc. produced 600 units and sold 400 units. If Greenlam uses variable costing so its value of ending finished goods inventory reported in the balance sheet will be lower than under absorption costing.

so answer is c) its value of ending finished goods inventory reported in the balance sheet will be lower than under absorption costing.

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