Reference no: EM132521673

Here are selected data regarding Python Industries' current year operations:

Units sold during year                      8,000 units

Variable S&A costs                         $0.50 per unit

Units produced during year               10,000 units

Direct material costs                        $3.00 per unit

Beginning inventory                          None

Direct labor costs                           $5.00 per unit

Ending inventory                           2,000 units

Variable MOH costs                          None

Selling price                                   $15.00 per unit

Fixed MOH costs                             $30,000 total

Fixed S&A costs                                $20,000 total

Question a. What is operating income using the absorption costing method?

Question b. What is operating income using the variable costing method?

Question c. Reconcile the difference between operating income under absorption and variable costing.