Leesburg Bags Produces Backpacks Leesburg Bags Produced 250,000 Backpacks for the Year and Sold

Multiple Choice

Leesburg Bags produces backpacks.The costs and prices for the backpacks follow (Assume the same unit costs in all years) : $$\begin{array} { l r } \text { Selling price } & \$ 23.00 \text { per backpack } \\\text { Variable costs: } & \\\text { Production } & \$ 11.00 \text { per backpack } \\\text { Selling } & \$ 2.00 \text { per backpack } \\\text { Fixed Costs: } & \\\text { Production } & \$ 900,000 \text { per year } \\\text { Selling and administrative } & \$ 540,000 \text { per year }\end{array}$$ Leesburg Bags produced 250,000 backpacks for the year and sold 200,000.There was no beginning inventory, and costs throughout the year were stable.How much higher or lower will variable costing be than full costing income?

A) $180,000 higher
B) $320,000 higher
C) $320,000 lower
D) $180,000 lower