Harris Corporation Produces a Single Product

Multiple Choice

Harris Corporation produces a single product.Last year, Harris manufactured 17, 000 units and sold 13, 000 units.Production costs for the year were as follows: Sales were $780, 000 for the year, variable selling and administrative expenses were $88, 400, and fixed selling and administrative expenses were $170, 000.There was no beginning inventory.Assume that direct labor is a variable cost. Under variable costing, the company's net operating income for the year would be:

A) $60, 000 higher than under absorption costing
B) $108, 000 higher than under absorption costing
C) $108, 000 lower than under absorption costing
D) $60, 000 lower than under absorption costing