Question - Great Outdoze Company manufactures sleeping bags, which sell for $65 each. The variable costs of production are as follows: Direct material$20 Direct labor 11 Variable manufacturing overhead 8

Budgeted fixed overhead in 20x1 was $200,000 and budgeted production was 25,000 sleeping bags. The year's actual production was 25,000 units, of which 22,000 were sold. Variable selling and administrative costs were $1 per unit sold; fixed selling and administrative costs were $30,000.

a. Prepare operating income statements for the year using absorption costing.

b. Prepare operating income statements for the year using variable costing.