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Problem 1: At the end of last year, Lee Company had 30,000 units in its ending inventory. Every year, Lee Company's variable production costs are $10 per unit, and its fixed manufacturing overhead costs are $5 per unit. The company's operating income for the year was $12,000 higher under variable costing than under absorption costing. Given these facts, what must have been the number of units of product in inventory at the beginning of the year?
Option A) 32,400 units.
Option B) 27,600 units.
Option C) 28,800 units.
Option D) 42,000 units.
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