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. 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. To identify: (a) The operating income from variable costing, (b) The operating incomes from absorption costing.

Step 1. Start by understanding the concepts of Variable Costing and Absorption Costing: - Variable Costing: It is a method used to allocate fixed manufacturing overhead by a company. It assigns these overhead costs to the period of production and not to the inventory left unsold or ending inventory. - Absorption Costing: It is a method used to allocate fixed manufacturing overhead by a company. It allocates these overhead costs based on the inventory produced and inventory sold. This method assumes that the unsold inventory also includes some fixed manufacturing overhead incurred during a period. Step 2. The question is asking you to determine: - (a) The operating income from variable costing - (b) The operating income from absorption costing Step 3. Now, let's look at the solution to compute the operating incomes: (a) To compute the operating income from variable costing, follow these steps: - Statement to show the computation of operating income from variable costing. - Refer to Table (1) for the detailed calculations. (b) To compute the operating income from absorption costing, follow these steps: - Statement to show the computation of operating income from absorption costing. - Refer to Table (2) for the detailed calculations. Step 4. Working Note for January: - Compute the fixed manufacturing cost per unit. - Use the formula: Fixed manufacturing cost per unit = Fixed manufacturing cost / Number of units. - Substituting the given values into the formula, we get the fixed manufacturing cost per unit. Step 5. Compute the variance for each month, starting with February. - Use the formula: Production variance = Fixed overhead rate × (Denominator level - Actual level produced). - Substitute the given values into the formula to calculate the production variance. Step 6. Finally, to determine the difference in operating incomes of various months under variable costing and absorption costing, follow these steps: - To explain: The difference among the operating incomes of various months under variable costing and absorption costing.