Task: Osawa, Inc. planned and actually manufactured 200,000 units of its single product in 2001, its first year in operation. Variable manufacturing costs were $20 per unit produced. Variable operating costs were $10 per unit sold. Planned and actual fixed manufacturing costs were $600,000. Planned and actual operating costs totaled $400,000 in 2001. Osawa sold 120,000 units of product in 2001 at a selling price of $40 per unit.
Question 1: Osawa's 2001 operating income using absorption costing is:
a. $440,000
b. $200,000
c. $600,000
d. $840,000
e. None of these
Question 2: Osawa's 2001 operating income using variable costing is:
a. $800,000
b. $440,000
c. $200,000
d. $600,000
e. None of these