Osawa Inc. planned and actually manufactured 200,000 units of it's single product in 2018, it's first of operation. Variable manufacturing cost was $20 per unit produced. Variable operating (non-manufacturing) cost was $10 per unit sold. Planned and actual fixed manufacturing costs were $600,000. Planned and actual fixed operating (non-manufacturing costs totaled $400,000. Osawa sold 120,000 units of product at $40 per unit.

Required:

1. Osawa's operating income using absorption costing is

(a) $440,000

(b) $200,000

(c) $600,000

(d) $840,000

(e) none of the above

Show supporting calculations please and thankyou! =)

2. Osawa's 2018 operating income using variable costing is:

a) $800,000

b) $440,000

c) $200,000

d) $600,000

e) none of the above

Show supporting calculations please and thankyou! =)