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Problem - The beginning inventory consists of 6,000 units, all of which are sold during the period. The beginning inventory fixed costs are $20 per unit, and the variable costs per unit are $90 per unit. Assuming no ending inventory, what is the difference in operating income between variable and absorption costing?
a. Variable costing operating income is $540,000 less than under absorption costing.
b. Variable costing operating income is $600,000 greater than under absorption costing.
c. Variable costing operating income is $120,000 less than under absorption costing.
d. Variable costing operating income is $120,000 greater than under absorption costing.
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