Zinkerer Inc. creates toys for kids.

Zink is wondering why managers indicate a choice must be made between Variable Costing and Absorption costing.

You are given the following, and are to provide income statements, using both methods.

$\backslash$table$[[$Beg$.$ Inventory,$85,000,$units$],[$Ending Inventory,$34,500,$units$],[$Sales$,345,400,$units$],[$Sales price,$25,],[$Manufacturing variable costs,$5\mathrm{.}10,],[$Sales variable costs,$1\mathrm{.}10,],[$Manufacturing Fixed costs,$$1,440,000,],[$Marketing Fixed costs,$$1,440,000,],[$Budgeted Machine Hours,$6,000,$Hours$],[$Standard production rate,$50,$Units$],[$Throughput $-$ budgeted Fixed Cost Overhead,$4\mathrm{.}80,]]$

a$)4$ marks

Prepare an Income Statement using both methods of costing.

b$)4$ marks Which method is chosen over the other, and why?