Company A's inventory increased 400 units over the prior year end.Its variable manufacturing costs are $5 per unit and fixed costs for the period were $250,000.During the current year,Company A produced 12,500 units.Absorption costing net income will be:
A) $20,000 higher than direct costing net income.
B) $8,000 higher than direct costing net income.
C) $8,000 lower than direct costing net income.
D) $20,000 lower than direct costing net income.

Question

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The Answer of Company A's inventory increased 400 units over the prior year end.Its variable manufacturing costs are $5 per unit and fixed costs for the period were $250,000.During the current year,Company A produced 12,500 units.Absorption costing net income will be:
A) $20,000 higher than direct costing net income.
B) $8,000 higher than direct costing net income.
C) $8,000 lower than direct costing net income.
D) $20,000 lower than direct costing net income.

Company A's Inventory Increased 400 Units Over the Prior Year