The annual data that follow pertain to Dan's Dynomite Eyewear, a manufacturer of swimming goggles. $($Dan$\text{'}$s Dynomite Eyewear had no beginning Finished Goods Inventory in January.$)$

$($Click the icon to view the data.$)$

Read the requirements.

Requirement $1.$ Prepare both conventional calculations to the nearest cent.$)$

Begin by preparing Dan's Dynomite Eyewe

Dan's Dynomite Eyewea Income Statement $($Absorption Year Ended December $3$

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Operating Income

Requirements

Prepare both conventional $($absorption costing$)$ and contribution margin $($variable costing$)$ income statements for Dan's Dynomite Eyewear for the year ended December $31.$

Which statement shows the higher operating income? Why?

Dan's Dynomite Eyewear's marketing vice president believes a new sales promotion that costs $$120,000$ would increase sales to $230,000$ goggles. Should the company go ahead with the promotion? Give your reasoning.

Data table

$\backslash$table$[[$Number of goggles produced,$240,000],[$Number of goggles sold,$220,000],[$Sales price per unit,$40],[$Variable manufacturing cost per unit,$12],[$Sales commission cost per unit,$5],[$Fixed manufacturing overhead,$720,000],[$Fixed selling and administrative costs,$130,000]]$