Gallison Company's net profit under absorption costing was $15 000 higher than under variable costing. During the year, the company produced 20 000 units for total variable production costs of $80 000. If fixed manufacturing overhead was $40 000, how many units were sold?

A) 20 000 units
B) 12 500 units
C) 10 000 units
D) 7500 units

Absorption Costing

A method of accounting that encompasses all costs associated with manufacturing a product, including direct materials, direct labor, and all manufacturing overhead costs, both fixed and variable.

Variable Costing

A costing method where only variable costs (costs that change with production volume) are included in the product cost, excluding fixed costs.

Fixed Manufacturing Overhead

Costs that remain constant regardless of the level of production, such as rent, utility bills, and salaries for certain employees.