1. Baton Rouges absorption costing income statements for the last two years are presented below: Year 1 Year 2 Sales........... $70,000 $90,000 Less cost of goods sold: Beginning inventory.... 0 6,000 Add cost of goods manufactured... 48.000 48,000 Goods available for sale....... 48,000 54,000 Less ending inventory. 6.000 0 Cost of goods sold. 42,000 54,000 Gross margin. 28,000 36,000 Less selling & admin. expenses. 25.000 31,000 Net operating income. $ 3.000 $ 5.000 Data on units produced and sold in each of these years are given below: Units in beginning inventory.. Units produced. Units sold.......... Year 1 Year 2 0 1,000 8,000 8,000 7,000 9,000 Fixed factory overhead totaled $16,000 in each year. This overhead was applied to products at a rate of $2 per unit. Variable selling and administrative expenses were $3 per unit sold. Required: a) Prepare new income statements for each year using variable costing. (10) b) Reconcile the absorption costing and variable costing net operating income for each year