1. Comparative income statements-variable and absorption costing Highlands Manufacturing Company has determined the cost of manufacturing a unit of product to be as follows, based on normal production of 50,000 units per year: Direct materials $10 Direct labor Variable factory overhead 6 $24 Fixed factory overhead 6 $30 Operating statistics for the months of July and August are as follows: July August 5 Units produced 5 Units sold 6,000 4,000 4,000 6,000 7 Selling and administrative expenses $25,000 $25,000 9 The selling price is $40 per unit. There were no inventories on July 1, and there is no work in process at August 31 1 Directions: Complete the comparative income statements on the next page for July and August for Highlands under: 2 1 absorption costing 2 variable costing 4