each. The company uses a fore manufacturing overhead location rate of 55 per game. Assume al cos data are from Game Play's first two months in business during 2018 and production levels are exactly as planned. The Requirements Data Table 2.800 units Compute the product cost per game produced under absorption costing and under variable casting Prepare monthly income statements for October and November, including columns for each month and a column, using these costing methods absorption costing b. variable costing is operating income higher under absorption costing or variable costing in October in November? Explan the pace of differences in operating income based on absorption costing versus variable costing Determine the balance in Finished Goods inventory on October 31 and November 30 under absorption costing and variable casting Compare the cesine balances and therences in orang nome Explain the differences in inventory balances based on sorption con versus variable coming Variate mandacturing cost per game Sales commission cost per Game Toralfred manufacturing overhead d a o Done Requirement 1. Compute the product cost per game produced under absorption costing and under variable costing. October 2018 Absorption Variable November 2018 Absorption Variable conting Costing costing costing Total product cost per game Requirement za Prepare montry income statements for October and November, including columns for each month and a total column, using absorption costing Game Play Absorption Costing Income Statement October 2018 November 2018 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 Game Play Variable Costing Income Statement October 2018 November 2018 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 are distributed across the entire production of fixed manufacturing overhead costs are run as part of the unit cost. Under the absorption costing method, $ 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 unitsin ending inventory under As inventory as was the case in November October costs that absorption costing assigned to that inventory are expensed in this November's Requirement 4. Determine the balance in Finished Goods Inventory on October 31 and November 30 under absorption costing and variable casting 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 October 31, 2018 November 30, 2018 Absorption Variable Absorption Variable costing casting costing costing Finished Goods Inventory The higher inventory balance under is representative of the Under absorption costing the difference in the product cost per whereas under variable costing, the difference in the product cost per game is game is
