Assume That the Predetermined Fixed Overhead Rate Per Unit Remains

Multiple Choice

Assume that the predetermined fixed overhead rate per unit remains the same from 2007 to 2008 and inventory decreases in 2008. Which of the following statements is true?

A) The fixed overhead expended in 2008 under variable costing will be greater than that expended under absorption costing.
B) The fixed overhead expended in 2008 under absorption costing will be greater than that expended under variable costing.
C) The amount of fixed overhead expended will be the same under both methods.
D) It is impossible to determine what effect the decrease in inventory will have on net profit under absorption costing.