Manta Ray Company manufactures diving masks with a variable cost of $31. The masks sell for $40. Budgeted fixed manufacturing overhead for the most recent year was $712,800. 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 111,550 units
Sales 108,850 units
2. Production 97,000 units
Sales 102,700 units
3. Production 80,200 units
Sales 80,200 units