The overhead absorption rate for product X is Ksh.10 per machine hour. Each unit of product X requires five machine hours. Stock of product X on 1.1.X1 was 150 units and on 31.12.X1 it was 100 units. What is the difference in profit between results reported using absorption costing and results reported using marginal costing? Is it::
The absorption costing profit would be Ksh.2,500 less?
The absorption costing profit would be Ksh.2,500 greater?
The absorption costing profit would be Ksh.5,000 less?
The absorption costing profit would be Ksh.5,000 greater?