Problem: Bianca Bicycle Company manufactures mountain bikes with a variable cost of $208. The bicycles sell for $390 each. Budgeted fixed manufacturing overhead for the most recent year was $3,080,000. Planned and actual production for the year were the same.
1. Production 20,000 units
Sales 23,400 units
2. Production 10,800 units
Sales 10,800 units
3. Production 11,000 units
Sales 9,400 units
Required:
State whether income is higher under variable or absorption costing and the amount of the difference in reported income under the two methods. Treat each condition as an independent case. (Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)
Method Amount
1. Same under bothVariable costingAbsorption costing $
2. Variable costingAbsorption costingSame under both $
3. Variable costingSame under bothAbsorption costing $