Alvin Inc. planned and actually manufactured 200,000 units of its single product in 2008, its first year of operations. Variable manufacturing costs were $30 per unit of product. Planned and actual fixed manufacturing costs were $600,000, and marketing and administrative costs totaled $400,000 in 2004. Alvin sold 120,000 units of product in 2008 at a selling price of $40 per unit.
1. Alvin’s 2008 operating income using variable costing is
A) $800,000
B) $600,000
C) $440,000
D) $200,000
2. Alvin’s 2008 operating income using absorption costing is
A) $840,000
B) $800,000
C) $440,000
D) $200,000