THE FOLLOWING APPLIES TO THE NEXT 2 QUESTIONS Cornell Products has the following cost information available for 2018 its first year of business based on normal capacity of 6,000 units: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative costs Fixed manufacturing overhead ($30,000/6,000 units = $5.00 per unit) Fixed selling and administrative costs $1.00 per unit $2.00 per unit $1.50 per unit $ .50 per unit $5.00 per unit $25,000 During 2018, Cornell produced 6,000 units out of which 5,400 units were sold for $20 each. I/1/18 beginning inventory was zero units and the 12/31/18 ending inventory was 600 units. 31. What is net income under variable costing? a. $35,000 b. $29,000 c. $26,000 d. $23,000 33. The key argument in favor of variable costing (and against absorption costing) is that fixed manufacturing overhead costs like "depreciation--factory machinery" and "rent-- factory building" should be treated as period costs. What is the reason behind this? A. Fixed manufacturing overhead costs occur regardless of the level of production and are a function of time. B. Fixed manufacturing overhead costs are generally immaterial in amount. C. Fixed manufacturing overhead (like direct materials, direct labor, and variable manufacturing overhead) is necessary in order to make a product. That is, you cannot make a product without direct materials, direct labor, variable manufacturing overhead, and fixed manufacturing overhead. D. Fixed manufacturing costs change as production changes. 34. The key argument in favor of absorption costing (and against variable costing) is that fixed manufacturing overhead costs like "depreciation--factory machinery" and "rent-- factory building" should be treated as product costs. What is the reason behind this? A. Fixed manufacturing overhead costs occur regardless of the level of production and are a function of time. B. Fixed manufacturing overhead costs are generally immaterial in amount. C. Fixed manufacturing overhead (like direct materials, direct labor, and variable manufacturing overhead) is necessary in order to make a product. That is, you cannot make a product without direct materials, direct labor, variable manufacturing overhead, and fixed manufacturing overhead. D. Fixed manufacturing costs change as production changes. 11