Burrito-Blast Makes Bean and Cheese Burritos That It Sells to Grocery

Multiple Choice

Burrito-Blast makes bean and cheese burritos that it sells to grocery stores. The burritos sell for $1 each. Burrito-Blast had beginning inventory of $20,000 on June 1 for 80,000 burritos. During June the company produced 500,000 burritos. June production costs are as follows:

-The company's June 30 ending inventory consists of 20,000 burritos. Which method would result in the larger operating income and why?

A) Variable costing- because the cost per unit is less, which means ending inventory costs are smaller
B) Variable costing- because the fixed manufacturing costs are all expensed during September
C) Absorption costing- because the cost per unit is more, which means ending inventory costs are larger
D) Absorption costing- because the fixed manufacturing costs are all expensed during September