Under what condition will a Company:

- That uses the Absorption Costing method to assign costs to their

inventory report net operating income using a Traditional Income Statement that

is:

more than

- The comparable net operating income amount using the Variable

Costing method to assign inventory costs to their inventory and reported net

operating income using a Contribution Margin Income Statement

Select one:

a. None of the other answers are correct

b. Inventory balances are increasing during the year--unit production exceeds unit sales for the period

c. Inventory balances are constant during the year--unit production equals unit sales for the period

d. Inventory balances are decreasing during the year--unit production is less than unit sales for the period

e. Variable manufacturing costs overhead exceeds fixed manufacturing overhead costs