Emerald Company provided the following historical data:

Selling price per unit P25

Variable FOH per unit 10

Fixed FOH 300,000

Variable S&A per unit 1

Fixed S&A 200,000

Year 1 Year 2 Year 3

Inventory, beg. none ? ?

Units produced 40,000 50,000 30,000

Units sold 40,000 40,000 40,000

Required:

Compute the Operating Income under the following methods:

a. Absorption Costing

b. Variable Costing