Sea Star Company manufactures diving masks with a variable cost of $219. The masks sell for $445. Budgeted fixed manufacturing overhead for the most recent year was $4,290,000. 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	23,950	units
2.	Production	11,900	units
	Sales	11,900	units
3.	Production	11,000	units
	Sales	9,950	units

ANSWERS

Income Higher Under (Method)Amount of Difference

1.Variable costing ------

2.Same under both $0 (ALREADY DONE )

3.Absorption costing -------