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Question: The Pacific Company manufactures a single product. The following data relate to the year just completed: VARIABLE COST PER UNIT: PRODUCTION.$43 SELLING AND ADMINISTRATIVE $15 FIXED COST IN TOTAL: PRODUCTION..$145,000 SELLING AND ADMINISTRATIVE $95,000 During the last year, 5,000 units were produced and 4,800 units were sold. There were no beginning inventories. Under absorption costing, the cost of goods sold for the year would be:

The Pacific Company manufactures a single product. The following data relate to the year just completed: VARIABLE COST PER UNIT: PRODUCTION.$43 SELLING AND ADMINISTRATIVE $15 FIXED COST IN TOTAL: PRODUCTION..$145,000 SELLING AND ADMINISTRATIVE $95,000 During the last year, 5,000 units were produced and 4,800 units were sold. There were no beginning inventories. The net operating income for the year under variable costing would be:

$8,800 greater than under absorption costing

$8,800 less than under absorption costing

$5,800 less than under absorption costing

The same as absorption costing

Please explain how you derived at your answer.