Woolworth Industries manufactures and sells a single product. The controller has prepared the following income statement for the most recent year:

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Read the requirements.

Requirement $1.$ Will the company's operating income under variable costing be higher, lower, or the same as its operating income under absorption costing? Why?

variable costing, all fixed MOH incurred during the period is expensed as a period cost.

Requirement $2.$ Project the company's operating income under variable costing without preparing a variable costing income statement.

Begin by selecting the correct formula to reconcile the difference between the two income figures. Then enter the amounts to calculate the difference in operating income.

Data table

Requirements

Will the company's operating income under variable costing be higher, lower,

or the same as its operating income under absorption costing? Why?

Project the company's operating income under variable costing without

preparing a variable costing income statement.

Prepare a variable costing income statement for the year.

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