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Question(s) / Instruction(s):

A company using lean production methods likely would show approximately the same net operating income under both absorption and variable costing because:

a)            there is no distinction made under lean production between fixed and variable costs.

b)            production is geared to sales under lean production and thus there would be little or no ending inventory.

c)            ending inventory would be valued in the same manner for both methods under lean production.

d)            under lean production fixed manufacturing overhead costs are charged to the period incurred rather than to the product produced.

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