Variable and absorption costing, explaining operating income differences. BigScreen Corporation manufactures and sells 50-inch television sets. It uses an actual costing system, in which unit costs are calculated on a monthly basis. Data relating to January, February, and March of 2007 are as follows:

January February March Unit data:

Beginning inventory 0 300 300 Production 1,000 800 1,250 Sales 700 800 1,500 Variable cost data:

Manufacturing costs per unit produced $ 1,080 $ 1,080 $ 1,080 Marketing costs per unit sold 600 600 600 Fixed cost data:

Manufacturing costs $400,000 $400,000 $400,000 Marketing costs 140,000 140,000 140,000 The selling price per unit is $3,000.

Required 1. Present income statements for BigScreen in January, February, and March of 2007 under

(a) variable costing and

(b) absorption costing.

2. Explain any differences between

(a) and

(b) forJanuary, February, and March.