Mathematics · Cost Accounting
PH Co produces a single product and currently uses absorption costing for its internal management accounting reports. The fixed production overhead absorption rate is $34 per unit. Opening inventories for the year were 100 units and closing inventories were 180 units. If marginal costing were used instead, the profit for the year, compared with the profit calculated by absorption costing, would be:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1$3,400 higher
- 2$3,400 lower
- 3$2,720 higher
- 4$2,720 lower✓
Correct answer
$2,720 lower
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