Vision Tester,Inc $\text { Production costs }$ $\text { Non-production costs }$

Multiple Choice

Vision Tester,Inc.,a manufacturer of optical glass,began operations on February 1 of the current year.During this time,the company produced 900,000 units and sold 800,000 units at a sales price of $12 per unit.Cost information for this year is shown in the following table:
$\text { Production costs }$
$\begin{array}{ll}\text { Direct materials } & \$ .80 \text { per unit } \\\text { Direct labor } & \$ .70 \text { per unit } \\\text { Variable overhead } & \$ 500,000 \text { in total } \\\text { Fixed overhead } & \$ 450,000 \text { in total }\end{array}$

$\text { Non-production costs }$
$\begin{array}{llr} \text { Variable selling and administrative } &\$ 30,000 \text {in total}\\ \text { Fixed selling and administrative } & \$ 490,000 \text {in total}\\\end{array}$

Given this information,which of the following is true?

A) Net income under variable costing will exceed net income under absorption costing by $50,000.
B) Net income under absorption costing will exceed net income under variable costing by $50,000.
C) Net income will be the same under both absorption and variable costing.
D) Net income under variable costing will exceed net income under absorption costing by $60,000.
E) Net income under absorption costing will exceed net income under variable costing by $60,000.