Data table October November Sales 1,900 units 2,600 units Production 2,300 units 2,300 units Variable manufacturing cost per game $ 14 $ 14 Sales commission cost per game 5 5 Total fixed manufacturing overhead 9,200 9,200 Total fixed selling and administrative costs 8,500 8,500 Print Done Play Time manufactures video games that it sells for $39 each. The company uses a fixed manufacturing overhead allocation rate of $4 per game. Assume all costs and production levels are exactly as planned. The following data are from Play Time's first two months in business: (Click the icon to view the data.) Read the requirements. Requirement 1. Compute the product cost per game produced under absorption costing and under variable costing. Total product cost per game October November Absorption costing Variable costing Absorption costing Variable costing Requirement 2a. Prepare monthly income statements for October and November, including columns for each month and a total column, using absorption costing. Play Time Absorption Costing Income Statement October November Total Operating Income Requirement 2b. Prepare monthly income statements for October and November, including columns for each month and a total column, using variable costing. Play Time manufactures video games that it sells for $39 each. The company uses a fixed manufacturing overhead allocation rate of $4 per game. Assume all costs and production levels are exactly as planned. The following data are from Play Time's first two months in business: (Click the icon to view the data.) Read the requirements. Requirement 2b. Prepare monthly income statements for October and November, including columns for each month and a total column, using variable costing. Play Time Variable Costing Income Statement October November Total Operating Income Requirement 3. Is operating income higher under absorption costing or variable costing in October? In November? Explain the pattern of differences in operating income based on absorption costing versus variable costing. In October, the operating income is higher under costing. The primary reason for this is that run as part of the unit cost. Under the absorption costing method, are distributed across the entire production of fixed manufacturing overhead costs are In November, the operating income is higher under costing. The primary reason for this is because Play Time manufactures video games that it sells for $39 each. The company uses a fixed manufacturing overhead allocation rate of $4 per game. Assume all costs and production levels are exactly as planned. The following data are from Play Time's first two months in business: (Click the icon to view the data.) Read the requirements. run as part of the unit cost. Under the absorption costing method, of fixed manufacturing overhead costs are In November, the operating income is higher under costing. The primary reason for this is because of fixed manufacturing overhead that is contained in the units in ending inventory under As Inventory as was the case in November, October's costs that absorption costing assigned to that inventory are expensed in This November's absorption costing income. Requirement 4. Determine the balance in Finished Goods Inventory on October 31 and November 30 under absorption costing and variable costing. Compare the differences in inventory balances and the differences in operating income. Explain the differences in inventory balances based on absorption costing versus variable costing. Finished Goods Inventory The higher inventory balance under product cost per game is October 31 November 30 Absorption costing Variable costing Absorption costing Variable costing is representative of the Under absorption costing, the difference in the , whereas under variable costing, the difference in the product cost per game is