Here are selected data regarding Python Industries current year operations:

Units sold during year 8,000 units Variable S&A costs $0.50 per unit

Units produced during year 10,000 units Direct material costs $3.00 per unit

Beginning inventory None Direct labor costs $5.00 per unit

Ending inventory 2,000 units Variable MOH costs None

Selling price $15.00 per unit Fixed MOH costs $30,000

total Fixed S&A costs $20,000 total

a. What is operating income using the absorption costing method?

b. What is operating income using the variable costing method?

c. Reconcile the difference between operating income under absorption and variable costing.