Difference in Operating Income under Absorption and Variable Costing

Bianca Bicycle Company manufactures mountain bikes with a variable cost of $1,300. The bicycles sell for $2,050 each. Budgeted fixed manufacturing overhead for the most recent year was $11,300,000. Planned and actual production for the year were the same. Required: State whether operating income is higher under variable or absorption costing and the amount of the difference in reported operating income under the two methods. Treat each condition as an independent case. (Round intermediate calculations to 2 decimal places.)

1.	Production	22,300	units
	Sales	25,600	units
2.	Production	11,200	units
	Sales	11,200	units
3.	Production	11,450	units
	Sales	9,950	units

Answer the following----

	Income Higher Under (Method)	Amount of Difference
1.	A, B, or C?
2.	A, B, or C?
3.	A, B, or C?

(A) Absorption costing

(B) Same under both

(C) Variable costing