A company which uses marginal costing has a profit of $37,500 for a period. Opening inventory was 100 units and closing inventory was 350 units.The fixed production overhead absorption rate is $4 per unit.What is the profit under absorption costing?
A、$35,700
B、$35,500
C、$38,500
D、$39,300
A、$35,700
B、$35,500
C、$38,500
D、$39,300
【参考答案及解析】
If inventory levels increase in a period, absorption costing will show a higher profit than marginal costing. Difference in profit = change in inventory levels x overhead absorption rate per unit =(350 - 100) units x $4 per unit =250 units x $4 =$1,000 $ Marginal costing profit 37,500 Increase in profit 1,000 Absorption costing profit 38,500
If inventory levels increase in a period, absorption costing will show a higher profit than marginal costing. Difference in profit = change in inventory levels x overhead absorption rate per unit =(350 - 100) units x $4 per unit =250 units x $4 =$1,000 $ Marginal costing profit 37,500 Increase in profit 1,000 Absorption costing profit 38,500