Exercise 8-20 Difference in Operating Income under Absorption and Variable Costing (LO 8-1, 8-4) Manta Ray Company manufactures diving masks with a variable cost of $33. The masks sell for $42. Budgeted fixed manufacturing overhead forthe most recent year was $796800. Actual production was equal to planned production. Required: State whether operating income is higher under variable or absorption costing and the amount ofthe difference in reported operating income under the two methods. Treat each condition as an independent case. (Do not round intermediate calculations.) 1. Production 99,666 units Sales 97,866 units 2. Production 83,666 units Sales 89,466 units 3. Production 81,666 units Sales 81,666 units Exercise 8-21 Absorption and Variable Costing (LO 8-1) Information taken from Tuscarora Paper Company's records for the most recent year is as follows: Direct material used $282J669 Direct labor 136J660 Variable manufacturing overhead 76J066 Fixed manutacturing overhead 1191999 Variable selling and administrative costs 64:009 Fixed selling and administrative costs 34,696 Required: 1. Assuming Tuscarora Paper Company uses variable costing. compute the inventoriable costs for the year. 2. Compute the year's inventoriable costs using absorption costing. Variable costing 2. Absorption costing Exercise 8-22 Absorption and Variable Costing (LO 8-1, 8-4) 5 Easton Pump Company's planned production for the year just ended was 18,700 units. This production level was achieved, and 20,800 points units were sold. Other data follow: eBook Direct material used $547, 910 Direct labor incurred 269, 280 References Fixed manufacturing overhead 385, 220 Variable manufacturing overhead 192, 610 Fixed selling and administrative expenses 327, 250 Variable selling and administrative expenses 101, 915 Finished-goods inventory, January 1 2, 900 units The cost per unit remained the same in the current year as in the previous year. There were no work-in-process inventories at the beginning or end of the year. Required: 1. What would be Easton Pump Company's finished-goods inventory cost on December 31 under the variable-costing method? (Do not round intermediate calculations.) 2-a. Which costing method, absorption or variable costing, would show a higher operating income for the year? 2-b. By what amount? (Do not round intermediate calculations.) 1 . Finished-goods inventory cost 2-a. Higher operating income method 2-h I Difference in reported income