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A company uses standard absorption costing to value inve
ntory. Its fixed overhead ab
sorption rate is $12 per
labour hour and each unit of production should take four
labour hours. In a recent
period when there was no
opening inventory of finished goods, 20,000 units we
re produced using 100,000 labour hours. 18,000 units
were sold. The actual profit was $464,000.
What profit would have been earned und
er a standard marginal costing system?
A $368,000
B $440,000
C $344,000
D $560,000I am getting B as the answer as the difference in the profit will be as a result of the difference int the inventory and there is closing inventory of 2000*12= 24000 and when the level of inventory has increased in marginal profit the profit will be lower bringing the profit to 440000
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