Examine Hoffman Company s simplified income statement based on variable costing
Examine Hoffman Company’s simplified income statement based on variable costing. Assume that the budgeted volume for absorption costing in 20X0 and 20X1 was 1,470 units and that total fixed costs were identical in 20X0 and 20X1. There is no beginning or ending work in process.

1. Prepare an income statement based on absorption costing. Assume that actual fixed costs were equal to budgeted fixed costs.
2. Explain the difference in operating income between absorption costing and variablecosting.
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