Chapter 5- Absorption costing - practice question Given the following information: Prior Year Current Year (Budget and (Budget and Actual) Actual) Beginning Inventory (Units) ? Sales (Units) 600,000 575,000 Manufactured (Units) 600,000 640,000 Selling Price ($/unit) 9.90 10.00 Variable Manufacturing Cost ($/unit) 4.80 5.00 Total Fixed Manufacturing Costs ($) 1,560,000 1,600,000 Variable Selling Cost ($/unit) 1.00 1.00 Total Fixed SG&A Costs ($) 351,000 358,000 Other information: The manufacturer uses FIFO. All Variable costs are direct costs Required: A. Prepare an income statement for the Current Year based on Variable Costing. B. Prepare an income statement for the Current Year based on Absorption Costing. C. Reconcile the difference in Net Income between Variable Costing and Absorption Costing for the current year. D. Near the very end of the fiscal year, the production manager noted that if Net Income increases by $200 they will get a big bonus. How can the production manager increase Net income using Absorption costing even though no additional units will be produced