The following questions are based on Tustin Corporation, which produces a single product selling for $12 per unit. One hundred thousand units were produced, and 80,000 units were sold during year 1; all ending inventory was in finished goods inventory.

Tustin had no inventory at the beginning of the year.

a. In presenting inventory on the balance sheet at December 3 1 , the unit cost under full-absorption costing is:
(1) $4.00.
(2) $4.80.
(3) $5.60.
(4) $7.20.

b. In presenting inventory on a variable costing balance sheet, the unit cost would be:
(1) $4.00.
(2) $4.80.
(3) $5.60.
(4) $7.20.

c. What is the operating profit using variable costing?
(1) $80,000.
(2) $144,000.
(3) $192,000.
(4) $208,000.

d. What is the operating profit using full-absorption costing?
(1) $80,000.
(2) $144,000.
(3) $192,000.
(4) $208,000.

e. What is the ending inventory using full-absorption costing?
(1) $96,000.
(2) $112,000.
(3) $144,000.
(4) $148,000.
/. What is the ending inventory under variable costing?
(1) $96,000.
(2) $112,000.
(3) $144,000.
(4) $148,000.

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Fixed Costs Direct materials Direct labor .. -0- -0- Factory overhead . . . $240,000 Variable Costs $2.40 per unit produced 1.60 per unit produced .80 per unit produced Marketing and administrative 128,000 .80 per unit sold