Bungalow Industries Manufactures and Sells Hardware for Homes Such

Multiple Choice

Bungalow Industries manufactures and sells hardware for homes such as door knobs and cabinet pulls.Each door knob sells for $15 per unit and during its first year of operations,Bungalow produced 24,000 units and sold 20,000 units.The company has fixed manufacturing overhead costs of $126,000 and fixed selling and administrative expenses of $32,000.Each door knob has $3.00 of direct materials,$1.00 of direct labor and $0.50 of variable overhead.Which of the following is not true?

A) If Bungalow uses absorption costing,there is $21,000 of fixed costs in ending inventory.
B) If Bungalow uses variable costing,profit for the door knob division is $52,000.
C) If Bungalow uses absorption costing,profit for the door knob division is $73,000.
D) The average cost per door knob under absorption costing is higher than the average cost per door knob under direct costing.
E) Next year,Bungalow produces 22,000 units and sells 26,000 units.As a result,profit for the year for the door knob division is equal for absorption and direct costing.