Problem:
The following data were provided by Rider, Inc, which produces a single product:
|
Units in beginning inventory
|
0
|
|
Units produced
|
5,000
|
|
Units sold
|
4,500
|
|
Variable costs per unit:
|
|
|
Production
|
$8
|
|
Selling and administrative
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$5
|
|
Fixed costs:
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|
|
Production
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$80,000
|
|
Selling and administrative
|
$60,000
|
For the year in question, one would expect the net operating income under absorption costing to be:
A) higher than the net operating income under variable costing.
B) lower than the net operating income under variable costing.
C) the same as the net operating income under variable costing.
D) none of these.