1. Describe how use of absorption costing in determining income can lead to overproduction and a buildup of inventory. Explain how variable costing can avoid this same problem. 2. Apply your knowledge of absorption costing and variable costing to solve the following problem: Sims Company, a manufacturer of tablet computers, began operations on January 1, 2017. Its cost and sales information for this year follows. Manufacturing costs Direct materials $40 per unit Direct labor. $60 per unit Overhead costs for the year Variable overhead $3,000,000 Fixed overhead $7,000,000 Selling and administrative costs for the year Variable. $770,000 Fixed. $4,250,000 Production and sales for the year Units produced.. 100,000 units Units sold... 70,000 units Sales price per unit $350 per unit A. Prepare an income statement for the year using variable costing. B. Prepare an income statement for the year using absorption costing. C. Under what circumstance(s) is reported income identical under both absorption costing and variable costing? Paper should be 3-5 pages including the calculations and the income statements in A and B.