Read the requirements.

Requirement $1.$ Calculate the product cost per unit using $1)$ absorption costing and $2)$ variable costing. $($Enter all amounts to the nearest cent. If a cost is not included in the product cost per unit,

leave the box empty; do not enter a zero.$)$

Requirement $2.$ If inventory increases by $10,000$ units over the preceding period, by how much would operating income differ between the two costing methods? Explain.

Begin by selecting the formula used to determine the change in operating income. Then enter the amounts and calculate the difference in operating income. $($Use parentheses or a minus sign for a

decrease in operating income.$)$

When inventory levels rise,

inventory levels increase, some of

the

using

towever, under

more is expensed

$|=$ Difference $in$ operating income

$|=$

remains "trapped" on the balance sheet as part of the cost of inventory

all fixed MOH is expensed as a period cost. In our

example here, $

$|$ leading to a higher