The overhead absorption rate for product T is $4 per machine hour. Each unit of T requires 3 machine hours. Inventories of product T last period were: Units Opening inventory 2,400 Closing inventory 2,700 Compared with the marginal costing profit for the period,the absorption costing profit for product T will be which of the following?
A、$1,200 higher
B、$3,600 higher
C、$1,200 lower
D、$3,600 lower
A、$1,200 higher
B、$3,600 higher
C、$1,200 lower
D、$3,600 lower
【参考答案及解析】
Difference in profit = 2，000 units inventory reduction x fixed overhead absorption rate per unit Difference in profit =change in inventory level x fixed overhead per unit =(2,400 - 2,700) x ($4 x 3)=$3,600 The absorption profit will be higher because inventories have increased, and fixed overheads have been carried forward in inventories.
Difference in profit = 2，000 units inventory reduction x fixed overhead absorption rate per unit Difference in profit =change in inventory level x fixed overhead per unit =(2,400 - 2,700) x ($4 x 3)=$3,600 The absorption profit will be higher because inventories have increased, and fixed overheads have been carried forward in inventories.