Chapter 6, Problem 7F15

To determine

Net operating income under Variable costing and Absorption costing:

Variable costing is a costing method which comprises of only variable manufacturing costs. Variable manufacturing costs include direct materials, direct labor and variable manufacturing overhead.

Absorption costing is different from variable costing. It comprises of direct materials, direct labors, and both variable and fixed manufacturing overhead.

To Compute:

The difference between net operating incomes under absorption costing and variable costing