Difference in reported operating income

Reference no: EM13760410

Sea Star Company manufactures diving masks with a variable cost of $12.50. The masks sell for $17.00. Budgeted fixed manufacturing overhead for the most recent year was $396,000. Actual production was equal to planned production.

Required:

State whether operating income is higher under variable or absorption costing and the amount of the difference in reported operating income under the two methods. Treat each condition as an independent case.


1.	Production	110,000	units
	Sales	107,000	units
2.	Production	88,000	units
	Sales	93,000	units
3.	Production	80,100	units
	Sales	80,100	units

Reference no: EM13760410

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