Answer (C) is correct . The absorption method is required for financial statements prepared according to GAAP. It charges all costs of production to inventories. The prime costs of $800,000, variable manufacturing overhead of $100,000, and the fixed manufacturing overhead of $160,000 are included. They total $1,060,000.
Answer (A) is incorrect because The amount of $800,000 equals only prime costs.
Answer (B) is incorrect because The amount of $900,000 equals inventoriable costs under variable costing.
Answer (D) is incorrect because The amount of $1,180,000 includes the fixed and variable selling and other expenses.
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Using absorption (full) costing, Jubal’s inventoriable costs are
