Absorption and variable costing. (CMA) Osawa Inc. planned and actually manufactured 200,000 units of its single product in 2009, its first year of operation. Variable manufacturing cost was $20 per unit produced. Variable operating (nonmanufacturing) cost was $10 per unit sold. Planned and actual fixed manufacturing costs were $600,000. Planned and actual fixed operating (nonmanufacturing) costs totalled $400,000. Osawa sold 120,000 units of product at $40 per unit.

4 REQUIRED 1. Osawa’s 2009 operating income using absorption costing is

(a) $440,000,

(b) $200,000,

(c) $600,000,

(d) $840,000, or

(e) none of these. Show supporting calculations.

2. Osawa’s 2009 operating income using variable costing is

(a) $800,000,

(b) $440,000,

(c) $200,000,

(d) $600,000, or

(e) none of these. Show supporting calculations.

LO1