Economics · Cost Accounting
When comparing the profits reported under absorption costing and marginal costing during a period when the level of inventory increased, which of the following statements is true?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Marginal costing profits will be higher and closing inventory valuations higher than those under absorption costing.
- 2Marginal costing profits will be higher and closing inventory valuations lower than those under absorption costing.
- 3Absorption costing profits will be higher and closing inventory valuations higher than those under marginal costing.✓
- 4Absorption costing profits will be higher and closing inventory valuations lower than those under marginal costing.
Correct answer
Absorption costing profits will be higher and closing inventory valuations higher than those under marginal costing.
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