Chapter 9, Problem 9.21E

1.

To determine

Absorption Costing:

The absorption costing is a method used to allocate the fixed manufacturing overhead by a company. It allocates these overheads based on the inventory produced and inventory sold. It is based on the approach that the unsold inventory also consist some fixed manufacturing overhead incurred during a period.

Variable Costing:

The variable costing is a method used to allocate the fixed manufacturing overhead by a company. It allocates these overheads to the period of production and not to the inventory left unsold or ending inventory.

To identify: The operating income from absorption costing.

2.

To determine

To identify: The operating income from variable costing.