Last year, Silver Company’s total variable production costs

Last year, Silver Company’s total variable production costs were $7,500, and its total fixed manufacturing overhead costs were $4,500. The company produced 3,000 units during the year and sold 2,400 units. There were no units in the beginning inventory. Which of the following statements is true?

A. Under variable costing, the average cost of the units in the ending inventory will be $4 each.

B. The operating income under absorption costing for the year will be $900 lower than the operating income under variable costing.

C. The ending inventory under variable costing will be $900 lower than the ending inventory under absorption costing.

D. Under absorption costing, the average cost of the units in ending inventory will be $2.50 each.