KP operates a chain of hospitals in the Los Angeles area. Its central food-catering facility, Doordash, prepares and delivers meals to the hospitals. The cost and revenues are as follows

Sales revenue	$10 per meal
Direct Material cost	$3 per meal
Direct Labor cost	$1 per meal
Variable manufacturing cost	$2 per meal
Fixed manufacturing cost	$8,000 per month

Production and sales for each month follow.

	Sales	Production
May	12500	18000
June	13000	9000

Required

1. Compute operating income for May under absorption accounting (3 points)
2. Compute operating income for May under variable accounting (3 points)

3. High production in May is the result of an anticipated surge in June employee vacations. Should it choose absorption or variable accounting for evaluating performance of managers? Why? (4 points)