On June 30, 2010, the end of the first month of operations, Smithey Manufacturing Co. prepared the following income statement, based on the variable costing concept:

Prepare an absorption costing incomestatement.

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Sales (100,000 units) Variable cost of goods sold: Variable cost of goods manufactured (120,000 units x $12 per unit) Less ending inventory (20,000 units x $12 per unit) Variable cost of goods sold Manufacturing margin Variable selling and administrative expenses Contribution margin . Fixed costs: Fixed manufacturing costs Fixed selling and administrative expenses Income from operations $1,650,000 $1,440,000 240,000 1,200,000 $ 450,000 $ 434,000 $ 42,000 $ 364,000