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Flavor, Corp, had the following production/sales levels for its first four years of business Production in units Sales in units Year 1 8,000 8,000 Year
Flavor, Corp, had the following production/sales levels for its first four years of business Production in units Sales in units Year 1 8,000 8,000 Year 2 10,000 8,000 Year 3 9,000 8,000 Year 4 5,000 8.000 Selling price per unit ($15), variable cost per unit ($10), and fixed manufacturing overhcad ($35,000) were the same each year. Flavor uses FIFO. Which of the following statements is correct? Multiple Choice O Variable costing and absorption costing will produce a different profit each year. Under variable costing profit in Year 2 would be higher than any other year. O Under absorption costing, profit in Year 4 would be lower than any other year. O Variable costing profit would exceed absorption costing profit in Year 2. Ending inventory is highest under both variable costing and absorption costing in Year 2. 0 0 O Cumulative profit for Years 1-4 will be higher under absorption costing than variable costing
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