Yankee Corporation manufactures a single product. The company has the following cost structure:

Variable costs per unit:
Production	$4
Selling and administrative	$1
Fixed costs in total:
Production	$12,000
Selling and administrative	$8,000

Last year, 4,000 units were produced and 3,500 units were sold. There were no beginning inventories. Under absorption costing, the cost of goods sold for the year would be:

$24,500

$28,000

$17,500

$14,000

The principal difference between variable costing and absorption costing centers on:

-whether fixed manufacturing costs and fixed selling and administrative costs should be included in product costs.

-whether selling and administrative costs should be included in product costs.

-whether variable manufacturing costs should be included in product costs.

-whether fixed manufacturing costs should be included in product costs.