Exercise 11-16A Variable costing versus absorption costing LO 11-4 Dilia Company incurred manufacturing overhead cost for the year as follows: Direct materials Direct labor Manufacturing overhead $50/unit $ 35/unit Variable $15/unit $37,500 $10,500 $20,000 Fixed ($25/unit for 1,500 units) Variable selling and administrative expenses Fixed selling and administrative expenses 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? Required A Required B Required C Prepare an income statement using absorption costing DILIA COMPANY Income Statement (Absorption Costing) Cost of goods sold Required ARequired B Required C Prepare an income statement using variable costing. DILIA COMPANY Income Statement (Variable Costing) Cost of goods sold Required A Required B Required C Determine the manager's bonus using each approach. Which approach would you recommend for int Absorption costing Variable costing Which approach is recommended