Last Year,Silver Company's Total Variable Production Costs Were $7,500,and Its

question 37

Multiple Choice

Last year,Silver Company's total variable production costs were $7,500,and its total fixed manufacturing overhead costs were $4,500.The company produced 3,000 units during the year and sold 2,400 units.There were no units in the beginning inventory.Which of the following statements is true?

• A) Under variable costing, the average cost of the units in the ending inventory will be $4 each.
• B) The operating income under absorption costing for the year will be $900 lower than the operating income under variable costing.
• C) The ending inventory under variable costing will be $900 lower than the ending inventory under absorption costing.
• D) Under absorption costing, the average cost of the units in ending inventory will be $2.50 each.

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