P21A-67B Preparing variable and absorption costing income statements Game Source manufactures video games that it sells for $43 each. The company fixed manufacturing overhead allocation rate of $5 per game. Assume all costs and production levels are first two months in business during 2018: uses a exactly as planned. The following data are from Game Source's November October Sales 2,900 units 1,500 units Production 2,500 units 2,500 units Variable manufacturing cost per game $ 17 $ 17 Sales commission cost per game Total fixed manufacturing overhead 7 7 Total fixed selling and administrative costs 12,500 12,500 11,500 11,500 Requirements 1. Compute the product variable costing. cost per game produced under absorption costing and under 2. Prepare monthly income statements for October and November, including col- umns for each month and a total column, using these costing methods: absorption costing b. variable costing a. 3. Is operating income higher under absorption costing or variable costing in Octo- ber? In November? Explain the pattern of differences in operating income based on absorption costing versus variable costing 4. Determine the balance in Finished Goods Inventory November 30 under absorption costing and variable costing. Compare the differences in inventory balances and the differences in operating income. Explain the differences in inventory balances based variable costing October 31 and on absorption costing on versus