Santana Rey expects sales of Business Solutions’s line of computer workstation furniture to equal 300 workstations (at a sales price of $3,000 each) for 2018. The workstations’ manufacturing costs include the following.

The selling expenses related to these workstations follow.

Santana is considering how many workstations to produce in 2018. She is confident that she will be able to sell any workstations in her 2018 ending inventory during 2019. However, Santana does not want to overproduce as she does not have sufficient storage space for many more workstations.
Required 1. Compute Business Solutions’s absorption costing income assuming

a. 300 workstations are produced.

b. 320 workstations are produced.
2. Compute Business Solutions’s variable costing income assuming

a. 300 workstations are produced.

b. 320 workstations are produced.
3. Explain to Santana any differences in the income figures determined in parts 1 and 2. How should Santana use the information from parts 1 and 2 to make production decisions

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Direct materials .......... Direct labor.... Variable overhead Fixed overhead.. ... $800 per unit $400 per unit $100 per unit $24,000 per year