An enterprise drew up its statement of profit or loss for its initial year of trading. Inventory was valued using marginal costing. The finance director now wishes to produce the statement with absorption costing. What impact will this change have on inventory valuation and on profit for the year?
- Ainventory valuation: decrease; profit for the year: decrease
- Binventory valuation: decrease; profit for the year: increase
- Cinventory valuation: increase; profit for the year: decrease
- Dinventory valuation: increase; profit for the year: increase