Dilia Company incurred manufacturing overhead cost for the year as follows. $ 50/unit $ 35/unit Direct materials Direct labor Manufacturing overhead Variable Fixed ($25/unit for 1,500 units) Variable selling and administrative expenses Fixed selling and administrative expenses $ 15/unit $ 37,500 $ 10,500 $ 20,000 The company produced 1,500 units and sold 1,200 of them at $225 per unit. Assume that the production manager is paid a 2 percent bonus based on the company's net income. Required a. Prepare an income statement using absorption costing. b. Prepare an income statement using variable costing. c. Determine the manager's bonus using each approach. Which approach would you recommend for internal reporting?

Dilia Company incurred manufacturing overhead cost for the year as follows. The company produced 1,500 units and sold 1,200 of them at $225 per unit. Assume that the production manager is paid a 2 percent bonus based on the company's net income. Required a. Prepare an income statement using absorption costing. b. Prepare an income statement using variable costing. c. Determine the manager's bonus using each approach. Which approach would you recommend for internal reporting