Reference no: EM132607830

Last year, Harris Company manufactured 17,000 units and sold 13,000 units. Production costs for the year were as follows:

Direct materials $153,000

Direct labour 110,500

Variable manufacturing overhead 204,000

Fixed manufacturing overhead 255,000

Sales were $780,000 for the year, variable selling and administrative expenses were $88,400, and fixed selling and administrative expenses were $170,000. There was no beginning inventory. Assume that direct labour is a variable cost.

Problem 1: Under variable costing, what was the company's operating income for the year, as compared with under absorption costing?

A) $60,000 lower than under absorption costing.

B) $108,000 higher than under absorption costing.

C) $60,000 higher than under absorption costing.

D) $108,000 lower than under absorption costing.