Problem 8-38 Variable Costing and Absorption Costing Income Statements; Reconciling Reported Operating Income (LO 8-2, 8-3, 8-4) Chataqua Can Company manufactures metal cans used in the food-processing industry. A case of cans sells for $35. The variable costs of production for one case of cans are as follows: Direct material Direct labor variable manufacturing overhead Total variable manufacturing cost per case $9.00 3.50 8.00 $20.50 Variable selling and administrative costs amount to $0.50 per case. Budgeted fixed manufacturing overhead is $552,000 per year, and fixed selling and administrative cost is $46,500 per year. The following data pertain to the company's first three years of operation, Year 92,000 Planned production (in unita) Finished-goods inventory (in unita) January 1 Actual production in unita) Sales in unita) Finished-goods inventory (in unita), December 31 92,000 92.000 0 Year 2 92,000 0 92,000 63,000 29,000 Year) 92.000 29,000 92.000 106,500 14,500 Actual costs were the same as the budgeted costs Required: 1. Prepare operating Income statements for Chataque Can Company for its first three years of operations using: a. Absorption costing b. Variable costing 2. Reconcile Chataqua Can Company's operating income reported under absorption and variable costing for each of its first three years of operation. Use the shortcut method. 3. Suppose that during Chataqua's fourth year of operation actual production equals planned production, actual costs are as expected, and the company ends the year with no inventory on hand, a. What will be the difference between absorption costing income and variable-costing income in year 4? Required: 1. Prepare operating income statements for Chataqua Can Company for its first three years of operations using a. Absorption costing b. Variable costing 2. Reconcile Chataqua Can Company's operating income reported under absorption and variable costing for each of its first three years of operation. Use the shortcut method. 3. Suppose that during Chataqua's fourth year of operation actual production equals planned production, actual costs are as expected, and the company ends the year with no inventory on hand. a. What will be the difference between absorption costing income and variable-costing income in year 4? b. What will be the relationship between total operating income for the four-year period as reported under absorption and variable costing? Complete this question by entering your answers in the tabs below. Req 1A Reg 16 Reg 2 Reg 3A Reg 38 Prepare operating income statements for Chataqua Can Company for its first three years of operations using absorption costing Yaar 1 Year 2 Year 3 $ 0$ D $ 0 Selling and Administrative Expenses $ 05 0 S Req 1B > WAG MY 2. Reconcile Chataqua Can Company's operating income reported under absorption and variable costing for each of its first three years of operation. Use the shortcut method. 3. Suppose that during Chataqua's fourth year of operation actual production equals planned production, actual costs are as expected, and the company ends the year with no inventory on hand. a. What will be the difference between absorption costing income and variable-costing income in year 4? b. What will be the relationship between total operating income for the four-year period as reported under absorption and variable costing? Complete this question by entering your answers in the tabs below. Req IA Reg 18 Reg 2 Reg 3A Reg 38 Prepare operating income statements for Chatagua Can Company for its first three years of operations using variable costing. Year 1 Year 2 Year Variable expenses $ 0 $ 0 $ O Fixed expenses 5 0 $ 05 0 Reg 1A Req2 > u. V 2. Reconcile Chataqua Can Company's operating income reported under absorption and variable costing for each of its first three years of operation. Use the shortcut method. 3. Suppose that during Chataqua's fourth year of operation actual production equals planned production, actual costs are as expected, and the company ends the year with no inventory on hand. a. What will be the difference between absorption costing income and variable-costing income in year 4? b. What will be the relationship between total operating income for the four-year period as reported under absorption and variable costing? Complete this question by entering your answers in the tabs below. Reg 1A Reg 13 Reg 2 Reg 3 Reg 38 Reconcile Chataqua Can Company's operating income reported under absorption and variable costing for each of its first three years of operation. Use the shortcut method. Year Change in inventory in units) Predetermined fixed overhead rats Difference in fixed overhead expensed under absorption and variable conting 1 2 3 Actual costs were the same as the budgeted costs. Required: 1. Prepare operating income statements for Chataqua Can Company for its first three years of operations using: a. Absorption costing b. Variable costing 2. Reconcile Chataqua Can Company's operating income reported under absorption and variable costing for each of its first three years of operation. Use the shortcut method. 3. Suppose that during Chataqua's fourth year of operation actual production equats planned production, actual costs are as expected, and the company ends the year with no inventory on hand. a. What will be the difference between absorption costing income and variable-costing income in year 4? b. What will be the relationship between total operating income for the four-year period as reported under absorption and variable costing? Complete this question by entering your answers in the tabs below. Reg 1A Reg 18 Reg 2 Req3A Reg 38 Suppose that during Chataqua's fourth year of operation actual production equals planned production, actual costs are as expected, and the company ends the year with no inventory on hand. What will be the difference between absorption costing Ancome and variable-costing income in year 42 Difference in reported incomo Required: 1. Prepare operating income statements for Chataqua Can Company for its first three years of operations using a. Absorption costing. b. Variable costing 2. Reconcile Chataqua Can Company's operating income reported under absorption and variable costing for each of its first three years of operation. Use the shortcut method. 3. Suppose that during Chataqua's fourth year of operation actual production equals planned production, actual costs are as expected. and the company ends the year with no inventory on hand. a. What will be the difference between absorption costing income and variable-costing income in year 4? b. What will be the relationship between total operating income for the four year period as reported under absorption and variable costing? Complete this question by entering your answers in the tabs below. Reg 1A Reg 18 Reg 2 Reg 3A 36 Suppose that during Chataqua's fourth year of operation actual production equals planned production, actual costs are as expected, and the company ends the year with no inventory on hand. What will be the relationship between total operating income for the four-year period as reported under absorption and variable costing? Total operating income will be higher under variable costing Total operating income will be higher under absorption costing Total operating income will be same under absorption and variable costing