Stoneware produced 20,000 units and sold 15,000 units during the year. They had budgeted to spend $250,000 on factory overhead based on normal usage...

Stoneware produced 20,000 units and sold 15,000 units during the year. They had budgeted to spend $250,000 on factory overhead based on normal usage of 25,000 machine hours.

Prepare memo to the President to explain the differences between variable costing and absorption costing net income amounts. Which costing system would have the higher reported net income? Use the proof formula to show the dollar amount of the variance between the costing systems.