The Southern Corporation manufactures a single product and has the following cost structure:

Variable costs per unit: $ 38

Production

Selling and administrative $ 14

Fixed costs per year:

Production $ 140,000

Selling and administrative $ 84,000

Last year, 7,000 units were produced and 6,800 units were sold. There was no beginning inventory.

The carrying value on the balance sheet of the ending inventory of finished goods under variable costing would be:

Multiple Choice

a. $6,800 greater than under absorption costing.

b. $6,800 less than under absorption costing.

c. $4,000 less than under absorption costing.

d. the same as absorption costing.