By applying a variety of cost accounting methods to the operating data of a given year, the controller of a manufacturing company prepares the following alternative income statements:

A B C D

Sales $1,000,000 $1,000,000 $1,000,000 $1,000,000

Cost of goods sold $375,000 $420,000 $250,000 $395,000

Variances:

Direct materials 15,000 -- 15,000 --

Direct labor 5,000 -- 5,000 --

Manufacturing overhead <25,000> -- -- <25,000>

Other costs (all fixed) 350,000 350,000 475,000 350,000

Operating income $280,000 $230,000 $255,000 $280,000

REQUIRED:

1. The controller used the following costing methods: (a) actual costing, (b) normal costing, (c) standard absorption costing, and (d) standard variable costing. Match each of these methods with the appropriate income statement, A, B, C, or D above, and explain the basis of your selection.
2. During the year, did inventory quantities increase, decrease, or remain the same? Explain....
3. During the year, was the level of production higher than, lower than, or equal to the company's denominator level of volume? Explain.....
4. During the year, was the variable manufacturing overhead incurred more than, less than, or equal to the budget? Explain....
5. An EXECUTIVE SUMMARY is required.