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The Southern Corporation manufactures a single product and has the following cost structure:
| | | |
| Variable costs per unit: | | |
| Production | $ | 34 |
| Selling and administrative | $ | 14 |
| Fixed costs per year: | | |
| Production | $ | 170,100 |
| Selling and administrative | $ | 139,480 |
| |
Last year, 6,300 units were produced and 6,200 units were sold. There was no beginning inventory.
The carrying value on the balance sheet of the ending inventory of finished goods under variable costing would be:
Multiple Choice
a. $6,200 less than under absorption costing.
b. the same as absorption costing.
c. $6,200 greater than under absorption costing.
d. $2,700 less than under absorption costing.
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