Lockhart Products Produces a Single Product

Multiple Choice

Lockhart Products produces a single product. During 2012 the company incurred the following costs: Lockhart had no units in beginning inventory. During 2012, 6,000 units were produced and 5,000 units were sold. Which of the following statements is true when comparing net operating income using absorption versus variable costing?

A) Net operating income will be $3,500 higher using absorption costing than using variable costing.
B) Net operating income will be $3,500 lower using absorption costing than using variable costing.
C) Net operating income will be $4,200 higher using absorption costing than using variable costing.
D) Net operating income will be $4,200 lower using absorption costing than using variable costing.