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Which of the following is true when sales units remain constant each month but production units fluctuate? a) Profit reported each month will always fluctuate in proportion to units produced b) Absorption cost inventory valuation will lead to a higher profit being reported than that where marginal cost inventory valuation is used where sales exceed production c) Marginal cost inventory valuation will give a higher profit than absorption cost inventory valuation where sales exceed production d) Marginal cost inventory valuation will result in the same profit being reported each month

Which of the following is true when sales units remain constant each month but production units fluctuate? a) Profit reported each month will always fluctuate in proportion to units produced b) Absorption cost inventory valuation will lead to a higher profit being reported than that where marginal cost inventory valuation is used where sales exceed production c) Marginal cost inventory valuation will give a higher profit than absorption cost inventory valuation where sales exceed production d) Marginal cost inventory valuation will result in the same profit being reported each month

Financial Reporting, Financial Statement Analysis and Valuation
Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Chapter10: Forecasting Financial Statement
Section: Chapter Questions
Problem 4QE: Suppose you are analyzing a firm that is successfully executing a strategy that differentiates its...
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Which of the following is true when sales units remain constant each month but production units
fluctuate?
a) Profit reported each month will always fluctuate in proportion to units produced
b) Absorption cost inventory valuation will lead to a higher profit being reported than that
where marginal cost inventory valuation is used where sales exceed production
c) Marginal cost inventory valuation will give a higher profit than absorption cost inventory
valuation where sales exceed production
d) Marginal cost inventory valuation will result in the same profit being reported each month

 

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