Variable costing profit for the period 1^st July through 30^th September was $400. Inventory data are as follows: What is the profit if absorption costing is used? A) $300 B) $500 C) $400 D) $600

Question

Quizplus · Accepted Answer

To calculate profit under absorption costing, we need to include fixed manufacturing overhead as part of the cost of goods sold. As there is no information given about fixed overhead expenses during the period, we cannot calculate the profit exactly. However, we know that under absorption costing, profit is generally higher than under variable costing when production exceeds sales. Therefore, we can conclude that the profit under absorption costing will be higher than $400, which is the profit calculated under variable costing. The only option that meets this requirement is option B, so the answer is B.

Variable Costing Profit for the Period 1st July Through 30th

Variable Costing Profit for the Period 1^st July Through 30^th