Bianca Bicycle Company manufactures mountain bikes with a variable cost of $2,500. The bicycles sell for $3,250 each. Budgeted fixed manufacturing overhead for the most recent year was $12,500,000. 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 23,500 units 28,000 units 2. Production 13,600 units Sales 13,600 units 3. Production Sales 13,250 units 10,550 units 1. 2. 3. Income Higher Under (Method) Amount of Difference