The Company Is Considering Using Either Super-Variable Costing or an Absorption

Multiple Choice

The company is considering using either super-variable costing or an absorption costing system that assigns $28 of direct labor cost and $70 of fixed manufacturing overhead to each unit that is produced. Which of the following statements is true regarding the net operating income in the first year?

A) Super-variable costing net operating income exceeds absorption costing net operating income by $6,000.
B) Absorption costing net operating income exceeds super-variable costing net operating income by $588,000.
C) Absorption costing net operating income exceeds super-variable costing net operating income by $6,000.
D) Super-variable costing net operating income exceeds absorption costing net operating income by $588,000.