A company uses standard absorption costing to value inventory. Its fixed overhead absorption rate is $12 per
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A company uses standard absorption costing to value inventory. Its fixed overhead absorption 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 were produced using 100 000 labour hours. 18 000 units were sold. The actual profit was $464 000.
What profit would have been earned under a standard marginal costing system?
(a) $368 000
(b) $440 000
(c) $344 000
(d) $560 000
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