Absorption and Varlable Costing with Over- and Underapplied Overhead Flaherty, Inc, has just completed its first year of operations. The unit costs on a normal costing basis are as follows: Manufacturing costs (per unit): Selline and adrainietration rhete" During the year, the company had the following activity: Actual fixed overhead was $11,600 less than budgeted fxed overhead. Buageted variable overhead was $4,800 less than the actual variable overhead. The company used an expected actual activity level of 11,000 direct labor hours to compute the predetermined overhead ratei Any ovehead variances are closed to Cost of Goods Sold. Required: 1. Compute the unit cost using (a) absorption costing and (b) variable costing. Feedback Theck My Work The unit cost under absorption costing includes one more cost than under variable costing. The unit cost under variable costing includes one less cost than under absorption costing. 2. Prepare an absorption-costing income statement. Round your answers to the nearest cent. 3. Prepare a variable-costing income statement. Round your answers to the nearest cent. 4. Reconcile the difference between the two income statements. The absorption costing generates an income $ than variable costing