Question

Income __________ when there is zero beginning inventory and all inventory units produced are sold. will be lower under variable costing than absorption costing will be the same under both variable and absorption costing will be higher under variable costing than absorption costing will be higher than gross margin under variable costing

Answer 1

Income will be the same under both variable and absorption costing when there is zero beginning inventory and all inventory units produced are sold.

Variable costing fluctuates based on level of output while adsorption costing is when manufacturing costs are absorbed by the amount produced. When everything is sold and no inventory is being held, both will be zero since there is nothing to sell or have on hand.