Exercise 11-16A (Algo) Variable costing versus absorption costing LO 11-4 Solomon Company incurred manufacturing overhead cost for the year as follows. Direct materials $ 38.40/unit Direct labor $ 27.10/unit Manufacturing overhead Variable $ 10.80/unit Fixed ($20.10/unit for 1,300 units) $26,130 Variable selling and administrative expenses $ 4,960 Fixed selling and administrative expenses $14,500 The company produced 1,300 units and sold 800 of them at $181.50 per unit. Assume that the production manager is paid a 1 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? Complete this question by entering your answers in the tabs below. Required A Required B Required c Prepare an income statement using absorption costing. Prepare an income statement using absorption costing. SOLOMON COMPANY Income Statement (Absorption Costing) Cost of goods Sold Prepare an income statement using variable costing. SOLOMON COMPANY Income Statement (Variable Costing) Variable costs Required A Required B Required Determine the manager's bonus using each approach. Which approach would you recommend for internal reporting? (Round your intermediate calculations and final answers to the nearest whole dollar amount.) Absorption costing Variable costing Which approach is recommended