Kano Components Limited reports the following for March 2024: Opening inventory 2,000 units, Closing inventory 5,000 units, Fixed production overhead ₦6,000,000, and budgeted/actual production 30,000 units. By how much will absorption costing profit differ from marginal costing profit?

The fixed overhead absorption rate is ₦6,000,000 ÷ 30,000 = ₦200 per unit. Inventory increased by 3,000 units (5,000 – 2,000). Under absorption costing, the fixed overhead deferred in closing inventory exceeds that released from opening inventory by 3,000 × ₦200 = ₦600,000, so absorption costing profit is ₦600,000 higher than marginal costing profit.