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Bianca Bicycle Company manufactures mountain bikes with a variable cost of $2,900. The bicycles sell for $3,650 each. Budgeted fixed manufacturing overhead for the most
Bianca Bicycle Company manufactures mountain bikes with a variable cost of $2,900. The bicycles sell for $3,650 each. Budgeted fixed manufacturing overhead for the most recent year was $12,900,000. Planned and actual production for the year were the same. Required: State whether operating income is higher under variable or absorption costing and the amount of the difference in reported operating income under the two methods. Treat each condition as an independent case. (Round intermediate calculations to 2 decimal places.) 1. Production Sales 2. Production Sales 3. Production Sales 23,900 units 28,800 units 14,400 units 14,400 units 13,850 units 10,750 units Income Higher Under (Method) Amount of Difference 2
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