DC-Marvel would like to evaluate one of the product lines that they sell to defense department. Every month the company produces an identical number of units, although the sales in units differ from month to month.

	Product B
Selling price	$109
Units in beginning inventory	360
Units produced	6,900
Units sold	7,200
Variable costs per unit:
Direct materials	$29
Direct labour	$31
Variable manufacturing overhead	$2
Variable selling and administrative	$7
Fixed costs:
Fixed manufacturing overhead	$53,500
Fixed selling and administrative	$145,000

Required:

Compute the Contribution Margin.

Compute the Operating Income under Variable Costing.

Prepare a reconciliation from your Operating Income under Variable Costing to Operating Income under Absorption Costing. Show the differences between each method.