Net Income under Absorption and Variable Costing. Krinkle Kookie Company completed production on 50,000 cases of cookies, with a variable cost of $250,000, during March, 20x1. In addition, the company incurred fixed factory overhead of $80,000. During March, it sold 20,000 cases for $200,000. The cookies that were sold had a variable manufacturing cost of $100,000. There were no beginning or ending balances in work-in-process inventory and no beginning balance in finished goods inventory. Selling and administrative expenses were all fixed and totaled $30,000. In completing the requirement below, formal income statements are not required.

a. Calculate net income under absorption costing.

b. Calculate net income under variable costing.

c. Explain the reason for the difference in net income under the two methods.