Sea Star Company manufactures diving masks with a variable cost of $215. The masks sell for $425. Budgeted fixed manufacturing overhead for the most recent year was $3,850,000. Actual production was equal to planned production.

Required:

State whether operating income is higher under variable or absorption costing and the amount of the difference in reported operating income under the two methods. Treat each condition as an independent case.

1.	Production	22,000	units
	Sales	23,750	units
2.	Production	11,500	units
	Sales	11,500	units
3.	Production	11,000	units
	Sales	9,750	units Income Higher under method 1. Amount of difference 2. Amount of difference 3. Amount of difference