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Exercise 3: Absorption costing The overhead absorption rate for product x is $10...

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Accounting

Exercise 3: Absorption costing
The overhead absorption rate for product x is $10 per machine hour. Each unit of product x requires five machine hours. Inventory of product x on 1.1.X1 was 150 units and on 31.12.X1 it was 100 units.
Required:
What is the difference in profit between results reported using absorption costing and results reported using marginal costing?
a. The absorption costing profit would be $2,500 less
b. The absorption costing profit would be $2,500 greater
c. The absorption costing profit would be $5,000 less
d. The absorption costing profit would be $5,000 greater
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