Assume that Smukers manufactures and sells 15,000 cases of jelly each year. The following data are available for the third quarter:

Total Fixed manufacturing overhead $45,000

Fixed selling and administrative expenses 10,000

Sales price per case 32

Direct materials per case 12

Direct labor per case 6

Variable manufacturing overhead per case 3

REQUIRED:

1. Compare the cost per case under both absorption costing and variable costing.
2. Compute net income under both absorption costing and variable costing.
3. Reconcile any differences in income. Explain.