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 2019. The workstations? manufacturing costs include the following.

The selling expenses related to these workstations follow.

Santana is considering how many workstations to produce in 2019. She is confident that she will be able to sell any workstations in her 2019 ending inventory during 2020. However, Santana does not want to overproduce as she does not have sufficient storage space for many more workstations.

Required

For parts 1 and 2, assume 300 workstations are sold.

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. For parts 1 and 2, which costing method, absorption or variable, yields the higher net income when 320 workstations are produced and 300 are sold?

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Direct materials. Direct labor.. $800 per unit Variable overhead Fixed overhead.. $100 per unit $400 per unit $24,000 per year Fixed selling expenses...... $4,000 per year Variable selling expenses.... $50 per unit