Absorption Costing Profit Is Always Equal To

question 3

Multiple Choice

Absorption costing profit is always equal to:

• A) variable costing profit + fixed overhead in opening inventory - fixed overhead in closing inventory.
• B) fixed overhead in opening inventory + fixed overhead in closing inventory.
• C) fixed overhead in opening inventory - fixed overhead in closing inventory.
• D) variable costing profit + fixed overhead in closing inventory - fixed overhead in opening inventory.

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Definitions:

Exchange Equilibrium

Exchange equilibrium refers to a state in a market where the supply of goods is equal to the demand for goods, resulting in no excess supply or demand.

Perfect Competition

A market structure characterized by an infinite number of buyers and sellers, homogenous products, and no barriers to entry or exit, leading to price takers rather than price makers.

Efficiency

The ability to achieve a desired result or work output with minimum wasted effort or expense.

Equity

A measure of ownership in a company or asset, typically represented by shares that entitle holders to a proportion of the company's profits.