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Bianca Bicycle Company manufactures mountain bikes with a variable cost of $1,400. The bicycles sell for $2,150 each. Budgeted fixed manufacturing overhead for the most
Bianca Bicycle Company manufactures mountain bikes with a variable cost of $1,400. The bicycles sell for $2,150 each. Budgeted fixed manufacturing overhead for the most recent year was $11,400,000. 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 22,400 units 25,800 units 11,400 units 11,400 units 11,600 units 10,000 units Amount of Difference Income Higher Under (Method) 1. Variable costing 2. Same under both 3. Absorption costing
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