Rubble Ltd develops an annual overhead budget at the start of each year (which has remained unchanged for the last 2 years), and closes any over- or underapplied overhead at year-end. For the firm's single product the following ending inventory levels have been experienced during the last 7 months: In how many months would variable costing profit be equal to absorption costing profit?
A) 0
B) 1
C) 2
D) 3

Question

Quizplus · Accepted Answer

Variable costing profit equals absorption costing profit when there is no change in inventory levels, which occurs in 1 month.

Rubble Ltd Develops an Annual Overhead Budget at the Start