Exercise 11-16A (Algo) Variable costing versus absorption costing LO 11-4 Finch Company incurred manufacturing overhead cost for the year as follows. Direct materials $ 39.10 /unit Direct labor $ 27.30 /unit Manufacturing overhead Variable $ 10.40 /unit Fixed ($18.20/unit for 1,200 units) $ 21,840 Variable selling and administrative expenses $ 5,040 Fixed selling and administrative expenses $ 15,900 The company produced 1,200 units and sold 700 of them at $181.70 per unit. Assume that the production manager is paid a 2 percent bonus based on the companys net income. Required Prepare an income statement using absorption costing. Prepare an income statement using variable costing. Determine the managers bonus using each approach. Which approach would you recommend for internal reporting