Answer the following statements true (T) or false (F)
1. When all the units produced are sold, the operating income calculated under absorption costing is higher when compared to the operating income calculated under variable costing. Assume that there is no beginning Finished Goods Inventory.
2. In the variable costing income statement, variable costs are reported separately from fixed costs.
3. When all units produced are sold, there is no difference in operating income between absorption costing and variable costing.
4. In variable costing, the balance of ending Finished Goods Inventory includes fixed manufacturing overhead.
5. When there are no units in the beginning Finished Goods Inventory and the units produced are more than the units sold, the operating income will be higher under absorption costing than variable costing.
1. FALSE
2. TRUE
3. TRUE
4. FALSE
5. TRUE
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