For a period during which the quantity of inventory at the end is larger than that at the beginning, operating income reported under variable costing will be larger than operating income reported under absorption costing.

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Honey Semere · Accepted Answer

Final Answer : False, Explanation :  Under variable costing, only variable manufacturing costs are included in product costs, whereas under absorption costing, both variable and fixed manufacturing costs are included. If inventory increases, absorption costing allocates some fixed costs to the additional inventory, reducing the expense recognized in the current period and potentially increasing operating income compared to variable costing, where all fixed costs are expensed in the period they are incurred.

For a period during which the quantity of inventory at the end is larger than that at the beginning, operating income reported under variable costing will be larger than operating income reported under absorption costing.

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