Manta Ray Company manufactures diving masks with a variable cost of $31. The cost per mask...

 

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Manta Ray Company manufactures diving masks with a variable cost of $31. The cost per mask remained the same in the current year as in the previous year. The masks sell for $40. Budgeted fixed manufacturing overhead for the year is $712,800. Actual production was equal to planned production. 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. Note: Do not round intermediate calculations. 1. Production 1. Sales 2. Production 2. Sales 3. Production. 3. Sales Income Higher Under (Method) 1. Absorption costing 2. Variable costing 3. Same under both 99,000 units 97,400 units 81,000 units 87,200 units 81,200 units 81,200 units Amount of Difference Manta Ray Company manufactures diving masks with a variable cost of $31. The cost per mask remained the same in the current year as in the previous year. The masks sell for $40. Budgeted fixed manufacturing overhead for the year is $712,800. Actual production was equal to planned production. 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. Note: Do not round intermediate calculations. 1. Production 1. Sales 2. Production 2. Sales 3. Production. 3. Sales Income Higher Under (Method) 1. Absorption costing 2. Variable costing 3. Same under both 99,000 units 97,400 units 81,000 units 87,200 units 81,200 units 81,200 units Amount of Difference

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SOLUTION To determine whether operating income is higher under variable or absorption costing and calculate the difference in reported operating incom... View the full answer