Aaron Corp is a manufacturing company that produces phones to the tech savvy consumer. The company pays bonuses to its managers based on the operating income of the division the manager is responsible for. In 2022, the Z-Phone operating division provided the following information:

Unit Production Information

Beginning Inventory 0

Units Produced 45,000

Units Sold 35,000

Ending Inventory 10,000

Manufacturing Information (in units)

Selling Price $50.00

Variable Manufacturing Costs $8.00

Variable Selling Costs $2.00

Other Information

Fixed Overhead $1,000,000

REQUIRED

A) Calculate the operating income for 2022 using absorption costing (4 marks)

B) Calculate the operating income for 2022 using variable costing (5 marks)

C) If the manager of the Z-Phone division had to choose between absorption and variable costing, which would they choose? Briefly explain. (1 mark)