Difference Between Profit Calculations Under Marginal Costing and Absorption Costing

Illustration Assume that by coincidence two firms have exactly the same costs and revanue, but that M ltd uses a marginal costing approach to valuation of stock-in-trade in its final accounts, whilst F Ltd has an absorption cost approach. Calculate the gross profit for each company for each of ther first three years of operating from the following: All fixed factory overhead is $9000 per annum. Direct labour costs over each of the three years- [...]