Houston, Inc., planned and actually manufactured 200,000 units of its single product in 2017, its first year of operation. Variable manufacturing cost was $18 per unit produced. Variable operating (nonmanufacturing) cost was $8 per unit sold. Planned and actual fixed manufacturing costs were $1,000,000. Planned and actual fixed operating (nonmanufacturing) costs totaled $440,000. Houston sold 100,000 units of product at $44 per unit.

Requirements 1. Houston's 2017 operating income using absorption costing is (a) $860,000, (b) $360,000, (c) $800,000, (d) $1,300,000, or (e) none of these. Show supporting calculations. 2. Houston's 2017 operating income using variable costing is (a) $1,360,000, (b) $860,000, (c) $360,000, (d) $800,000, or (e) none of these. Show supporting calculations. Print Done Begin by selecting the labels used in the absorption costing calculation of operating income and enter the supporting amounts. Perform the calculations in this step, but select the correct operating income in the next step. (For amounts with a $0 balance, make sure to enter "0" in the appropriate cell.) Absorption costing Revenues Cost of goods sold: Variable manufacturing costs Beginning inventory Allocated fixed manufacturing costs Cost of goods available for sale Deduct ending inventory Cost of goods sold Gross margin Variable operating costs Fixed operating costs Operating income