An increase in of $1,000 in fixed selling overheads will affect the net profit reported under marginal and absorption cost methods as follows: a) Decrease net profit only where absorption costing is used b) Decrease net profit only where marginal costing is used c) Decrease net profit equally in both absorption and marginal costing d) Leave net profit unchanged in both cases

Question

An increase in of $1,000 in fixed selling overheads will affect the net profit reported under
marginal and absorption cost methods as follows:
a) Decrease net profit only where absorption costing is used
b) Decrease net profit only where marginal costing is used
c) Decrease net profit equally in both absorption and marginal costing
d) Leave net profit unchanged in both cases

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