In Henkel Company 50000 units are produced and 40000 units are sold. Variable manufacturing costs per unit are $8 and fixed manufacturing costs are $120000. The cost of the ending finished goods inventory under each costing approach is: $\begin{array}{cc}\text{ Absorption }& \text{ Variable }\\ \underline{\text{ Costing }}& \underline{\text{ Costing }}\end{array}$
A) $\begin{array}{lrr}& \$104,000& \$80,000\end{array}$
B) $\begin{array}{lrrc}& 104,000& & 100,000\end{array}$
C) $\begin{array}{lrrc}& 112,000& & 80,000\end{array}$
D) $\begin{array}{lrr}& 1,120,000& 100,000\end{array}$

Variable Manufacturing Costs

Costs that vary directly with the level of production output, such as raw materials and direct labor costs.

Fixed Manufacturing Costs

Overheads or expenses that do not change with the level of production, such as rent and salaries.

Costing Approach

A costing approach is a method or technique used to determine the cost of a product or service, which can include different methodologies like absorption costing or activity-based costing.