Bianca Bicycle Company manufactures mountain bikes with a variable cost of $2,700. The bicycles sell for $3,450 each. Budgeted fixed manufacturing overhead for the most recent year was $12,700,000. Planned and actual production for the year were the same.

Required:

State whether income is higher under variable or absorption costing and the amount of the difference in reported opearting income under the two methods. Treat each condition as an independent case.

Bianca Bicycle Company manufactures mountain bikes with a variable cost of $2,700. The bicycles sell for $3,450 each. Budgeted fixed manufacturing overhead for the most recent year was $12,700,000. Planned and actual production for the year were the same. Required: State whether income is higher under variable or absorption costing and the amount of the difference in reported opearting 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 23,700 units 28,400 units 14,000 units 14,000 units 13,550 units 10,650 units Amount of Difference Income Higher Under (Method) 1. Variable costing 2. Same under both 3. Absorption costing