Exercise 8-24 Difference in Operating Income under Absorption and Variable Costing (LO 8-1, 8-4) Bianca Bicycle Company manufactures mountain bikes with a variable cost of $3,000. The bicycles sell for $3,750 each. Budgeted fixed manufacturing overhead for the most recent year was $13,000,000. 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 24,000 units 29,000 units Sales 2. Production 14,600 units Sales 14,600 units 3. Production 14,000 units Sales 10,800 units 1. Production 24,000 units Sales 29,000 units 2. Production 14,600 units Sales 14,600 units 3. Production 14,000 units Sales 10,800 units Income Higher Under (Method) 1. Variable costing 2. Same under both 3. Absorption costing Amount of Difference