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

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