P22-7A=Link Back to Chapter 19 (Manufacturing Company Income Statement) and Chapter 20 (Manufacturing Overhead). Magical Melodies manufactures music boxes, which it sells for $45 each. The company uses the FIFO inventory costing method, and it computes a new monthly fixed manufacturing overhead rate based on the actual number of music boxes produced that month. All costs and production levels are exactly as planned. The following data are from Magical Melodies' first two months in business during 20X4: October November Sales. Production Variable manufacturing expense per music box. 2.000 units 2,200 units 2,500 units 2,000 units $15 515 Sales commission per music box $8 $8 Total fixed manufacturing overhead. $10,000 $10,000 Total fixed marketing and administrative expenses.. $9,000 $9,000 Required 1. Compute the product cost per music box produced under absorption costing and under variable costing. Do this first for October and then for November. 2. Prepare separate monthly income statements for October and for November, using

a. Absorption costing

b. Variable costing 3. Is operating income higher under absorption costing or variable costing in October? In November? Explain the pattern of differences in operating income based on absorption costing versus variable costing.