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Absorption Cost Method Variable Cost Method c. $550,000 $700,000 d. $550,000 $905,000 9-26 Absorption and variable costing. (CMA) Osawa, Inc., planned and actually manufactured 200,000 units of its single product in 2014, its first year of operation. Variable manufacturing cost was $20 per unit produced. Variable operating (nonmanufacturing) cost was $10 per unit sold. Planned and actual fixed manufacturing costs were $600,000. Planned and actual fixed operating (nonmanufacturing) costs totaled $400,000. Osawa sold 120,000 units of product at $40 per unit. Required: 1. Osawa's 2014 operating income using absorption costing is (a) $440,000, (b) $200,000, (c) $600,000, (d) $840,000, or (e) none of these. Show supporting calculations. 2. Osawa's 2014 operating income using variable costing is (a) $800,000, (b) $440,000, (c) $200,000, (d) $600,000, or (e) none of these. Show supporting calculations.ACCT2112 Week 12 TUTE Chapter 9 Questions 9-1 Differences in operating income between variable costing and absorption costing are due solely to accounting for fixed costs. Do you agree? Explain. 9-17 Queen Sales, Inc. has just completed its first year of operations. The company has not had any sales to date. Queen has incurred the following costs associated with its production as of December 31, Year 1: Direct materials $45,000 Production labor 35,000 Bookkeeper salary 28,000 Factory utilities 18,500 Office rent 12,000 Factory supervisor salary 9,600 Machine maintenance contract 7,500 Under absorption costing, what is the inventory amount shown on the balance sheet at December 31, Year 1? a. $155,600 b. $115,600 $98,500 d. $80,000 9-19 The following information relates to Drexler Inc.'s Year 3 financials: Direct labor $420,000 Direct materials 210,000 Variable overhead 205,000 Fixed overhead 355,000 Variable SG&A expenses 150,000 Fixed SG&A expenses 195,000 Year 3 period costs for Drexler, under both the absorption and variable cost methods, will be Absorption Cost Method Variable Cost Method a. $345,000 $700,000 b. $345,000 $905,000