Arcade Away manufactures video games that it sels for $39 each. The company uses a fixed manufacturing overhead allocation rate of $6 per game. Assume all costs and production levels are exactly as planned. The following data are from Arcade Away's first two months in business (Click the icon to view the data) Read the requirements Requirement 1. Compute the product cost per game produced under absorption costing and under variable costing October Absorption Variable costing costing Total product cost per game Data table October November Sales 1,900 units 2,400 units Production 2,300 units 2,300 units Variable manufacturing cost per game $ 12 $ 12 Sales commission cost per game 3 3 Total fixed manufacturing overhead 13,800 13,800 Total fixed selling and administrative costs 9,000 9,000 Print Done Requirements 1. Compute the product cost per game produced under absorption costing and under variable costing. 2. Prepare monthly income statements for October and November, including columns for each month and a total column, using these costing methods: 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. 4. Determine the balance in Finished Goods Inventory on October 31 and November 30 under absorption costing and variable costing. Compare the differences in inventory balances and the differences in operating income. Explain the differences in inventory balances based on absorption costing versus variable costing. Print Done -