When closing inventory is higher than opening inventory, absorption-costing profit will be:
ALower than marginal-costing profit
BHigher than marginal-costing profitCORRECT
CEqual
DIndeterminate
ACCAPerformance Management
AI
Toaster Teacher
Why the answer is B, and why the others tempt you.
Rising inventory defers some fixed overhead expense (capitalised into inventory) so absorption profit > marginal profit.
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