Consider the Following Statements Regarding Absorption Costing and Variable Costing

question 10

Multiple Choice

Consider the following statements regarding absorption costing and variable costing.
i. Profit reported under absorption costing for a year will likely differ from that reported under variable costing because production and sales differ.
ii. Total profit when added together over a ten-year period will be approximately equal under absorption costing and variable costing because production and sales will be approximately the same.
iii. Total profit when added together over a ten-year period will be significantly different under absorption and variable costing because fixed costs will generally increase significantly over that long.
Which statement/s is/are true?

• A) i
• B) i and ii
• C) i and iii
• D) ii

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