Answer the Following Questions Using the Information Below:
Healesville Animates

Multiple Choice

Answer the following questions using the information below:
Healesville Animates produces and sells a luxury animal pillow for $40.00 per unit.In the first month of operation,3000 units were produced and 2250 units were sold.Actual fixed costs are the same as the amount budgeted for the month.Other information for the month includes:
$\begin{array}{ll}\text { Variable manufacturing costs } & \$ 19 \text { per unit } \\\text { Variable marketing costs } & \$ 1 \text { per unit } \\\text { Fixed manufacturing costs } & \$ 30000 \text { per month } \\\text { Administrative expenses, all fixed } & \$ 6000 \text { per month } \\\text { Ending inventories: } &\\text { Direct materials } & -0- \\\text { WIP } & -0- \\\text { Finished goods } & 750 \text { units }\end{array}$
-The difference between operating profits under variable costing and absorption costing centres on how to account for:

A) fixed manufacturing costs.
B) direct materials costs.
C) variable manufacturing costs.
D) Both B and C are correct.