Game Time monufactures vidoo games that it sels for $39 each. The company uses a fixed manufacturing overhead allocaticn rate of $5 per game. Assume all costs and production levels are exactly as planned. The following dala are from Game Time's first fwo months in business (Click the koon lo view the data) Read the requitemonts Requirement 1. Compule the product cost per garne produced under absorption costing and under vanable costing. Requirement 2a. Prepare monthy income statements for October and November, including columns for each month and a total colurn, usng absorpbon costing- Requirement 3. is oporating income higher under absorplion eosting or variable coshng in October? In November? Explain the pattem of differences in operating income based on absorpocin costing versus variable costing in Oclobor, the oporating income is higher under costing. The primary reasen for this is that are disinbuled across the erire production run as part of the unt cost. Under the absorption costing method. of fixed manufacturing overitoad costs are Requirement 3. Is operating income higher under absorption costing or variable costing in October? In November? Explain the paffern of differences in operating income based on absorption costing versus variable costing. In October, the operating income is higher under costing. The primary reasco for this is that afe distributod across the entire production run as part of the unit cost. Under the absorption costing method, of ficod manutacturing ovorhead costs are 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 units in ending imventory under As invertory as was the case in November, Octobers costs that abeorption couting asegned to that inwentory are expensed in abeorption costing income Requirement 4. Determine the balance in Finished Goods Imentory on October 31 and November 30 undor absorption costing and variable coating. Cornpare the differences in imventory balarices and the differences in operating income. Explain the differences in inventory balances based on absorpbon costing versua variable costing. Requirement 4. Determine the balance in Finished Coods inventory on October 31 and November 30 undor absorpsion costing and variablo costing Compare the diflerences in imvontory balances and the differences in operating income. Explain the dillerences in irventory balances based on absorption costing versus variabie costing The higher inventory balanco undoe is representative of the cost per garne is Under absorption costing. the difference in the product Whereas under variable costing, the difference in the pecoduct cost per garne is Data table ng. fnth and a total column