Where the Fixed Overhead Rate in Both Opening and Closing

question 63

Multiple Choice

Where the fixed overhead rate in both opening and closing inventories is the same, which of the following statements is correct?

• A) If inventory remains the same, absorption costing profit will be greater than variable costing profit.
• B) If inventory has decreased, absorption costing profit will be greater than variable costing profit.
• C) Absorption costing profit is always greater than variable costing profit.
• D) If inventory has increased, absorption costing profit will be greater than variable costing profit.

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