Rubble Ltd Develops an Annual Overhead Budget at the Start

Multiple Choice

Rubble Ltd develops an annual overhead budget at the start of each year (which has remained unchanged for the last 2 years) , and closes any over- or underapplied overhead at year-end. For the firm's single product the following ending inventory levels have been experienced during the last 7 months: In how many months would variable costing profit be lower than absorption costing profit?

A) 1
B) 2
C) 3
D) 4