Assume a manufacturing company that has started production in the current year. Which of the following would result in the highest profit being reported if the company has 1,000 units of ending inventory?
A) throughput costing
B) variable costing
C) absorption costing
D) standard costing

Question

Quizplus · Accepted Answer

Absorption costing includes all manufacturing costs (direct materials, direct labor, and both variable and fixed manufacturing overhead) in the cost of a product. This method results in higher inventory values and, when inventory levels increase, leads to higher reported profits because some of the fixed manufacturing overhead costs are allocated to the ending inventory and not expensed in the current period.

Assume a Manufacturing Company That Has Started Production in the Current