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<p><strong>1. There is no opening or closing stocks</strong></p> <p><strong>2. There is only closing stocks </strong></p> <p><strong>3. There is only opening stocks </strong></p> <p><strong>4. Opening stocks are lower than closing stocks </strong></p>
Answer is A
If all produced units are sold and there is no opening & closing stock then profit reported under both system will be same.
When there are changes in the inventory levels, the two systems will result in different
profits. The differences are attributed to the timing of when fixed production
overheads are expensed.
If the inventory level is rising (i.e. the production quantity exceeds the sales quantity in
the period), then the profit under absorption costing will be higher than that under4
marginal costing because a greater amount of fixed production overheads in the
closing inventory is being deducted from the expenses of the period than is being
brought forward in the opening inventory for the period.
If inventory level is falling (i.e. the sales quantity exceeds the production quantity in
the period), then the profit under marginal costing will be higher than that under
absorption costing because a larger amount of fixed production overheads are
brought forward as an expense in the opening inventory than is being deducted in the
closing inventory adjustment
The Answer A
1. There is no opening or closing stocks
When there is no inventory at the beginning and the end of a period, or no changes in the levels of inventory in a period (i.e. the production quantity is equal to the sales quantity in the period), absorption costing and marginal costing provide the same profit figures for the period.
1. There is no opening or closing stocks
There are no opening and closing stocks, First one is true.
1 is the correct answer,,,,,
Answer is A
If their is no opening and losing balance.
Option1.
Fluctuations in inventory give rise to the difference in resulting profits.
But
Apart from this if prices remain same both of the accounting systems give same periodic overall profits.
A
