The annual data that follows pertain to Rick's Radical Eyewear, a manufacturer of swimming goggles $($the company had no beginning inventory$)$:

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

Read the requirements.

statement.

Rick's Radical Eyewear

Income Statement $($Absorption Costing$)$

For the Year Ended December $31$

Data table

Requirements

Prepare both conventional $($absorption costing$)$ and contribution

margin $($variable costing$)$ income statements for Rick's Radical Eyewear for

the year.

Which statement shows the higher operating income? Why?

The company marketing vice president believes a new sales promotion that

costs $$140,000$ would increase sales to $220,000$ goggles. Should the

company go ahead with the promotion? Give your reason.