Exercise $11-16$A $($Algo$)$ Variable costing versus absorption costing LO $11-4$

Benson Company incurred manufacturing overhead cost for the year as follows.Direct labor

$ $38\mathrm{.}30/$unit

Manufacturing overheadFixed $($$$19\mathrm{.}10/$unit for $1,900$ units$)$ $$36,290$

Variable selling and administrative expenses

$ $10,220$

Fixed selling and administrative expenses

$ $16,000$The company produced $1,900$ units and sold $1,400$ of them at $$180\mathrm{.}70$ per unit. Assume that the production manager is paid a $3$

percent bonus based on the company's net income.

Required

a$.$ Prepare an income statement using absorption costing.

b$.$ Prepare an income statement using variable costing.

c$.$ Determine the manager's bonus using each approach. Which approach would you recommend for internal reporting?