Ludau Corporation produces and sell luxury phone case for Apple newest iPhone. The company started producing case for iPhone 12 on October 2020. The case is called iLux. The selling price for the iLux case is $25per case. Following are information related to the production and sales of iLux in October and November 2020:

The ludau was able to sell 23,000 iLux cases in October 2020 and 37,500 iLux case in November 2020. Meanwhile the company produces 28,500 in October2020. At the beginning of October 2020, the company does not have beginning inventory for iLux case. By the end of November 2020, Ludau record 1080iLux case remaining in the company warehouse. The fixed manufacturing overhead cost are the cost relate to the production machinery. The total annual machine capacity for iLux is 354,000 with annual budgeted cost of $1,486,800. The budget was made with the assumption that the production is spread evenly throughout the year. The fixed manufacturing overhead cost is allocated based on number of iLux cases produced.

Required1.Prepare an operating income statement for November 2020 using

:a. Absorption Costing method

b.Variable Costing method

2.Reconcile the differences in the operating income of both methods

Direct Materials Direct Labor Variable Manufacturing Overhead Fixed Manufacturing Overhead Variable Marketing Expenses Fixed Marketing Expenses Variable General and Admin Expenses October 2020 $126,800 123,590 72.520 102,500 40.750 25,000 15% of total sales value November 2020 $178.000 158,000 75,600 123,900 49,500 25,000 15% of total sales value