Read the requirements.

Data table

Prepare Al's Awesome Eyewear's contribution margin $($variable costing$)$ income statement for the year ended December $31.$

Requirements

Al's Awesome Eyewear

Income Statement $($Variable Costing$)$

Year Ended December $31$

Prepare both conventional $($absorption costing$)$ and contribution

margin $($variable costing$)$ income statements for Al's Awesome Eyewear for

the year ended December $31.$

Which statement shows the higher operating income? Why?

Al's Awesome Eyewear's marketing vice president believes a new sales

promotion that costs $$100,000$ would increase sales to $170,000$ goggles.

Should the company go ahead with the promotion? Give your reasoning.

Requirement $2.$ Which statement shows the higher operating income? Why?

The

income statement shows the higher operating income. The operating income under

costing is higher because the units sold

The difference in operating income

between the two income statements is attributable to the

attached to the units