Y Ltd makes gadgets.

It has no opening inventory

Closing inventory was 600 units

Budgeted and actual fixed manufacturing costs are $800

Budgeted and actual production is 1600 units

Variable manufacturing cost was $1.50 per unit

The selling price was $5 per unit

Sales commissions of 5% of sales revenue are paid to sales people

Other non-manufacturing fixed costs total $300

Calculate the Operating Income according to both Absorption and Variable costing and explain the difference.