T-Shirt Man is a direct marketer of popular t-shirts. Following is information about its revenue and cost structure:

Selling Price $15.00 / t-shirt Variable Costs:

Production (manufacturing costs) $3.00 / t-shirt Selling & Administration (non-mfg costs) $1.00 / t-shirt

Fixed Costs:

Production (manufacturing costs) $1,000,000 / year Selling & Administration (non-mfg costs) $2,000,000 / year

Assume 400,000 t-shirts are produced and 350,000 are sold in 2011. What is ending inventory under full costing?

$150,000

$275,000

$200,000

$325,000