9-27 Absorption versus variable costing. Regina Company manufacturers a professional-grade vacuum cleaner and began operations in 2020. For 2020, Regina budgeted to produce and sell 20,000 units. The com- pany had no price, spending, or efficiency variances and writes off production-volume variance to cost of goods sold. Actual data for 2020 are given as follows: Home Insert Page Layout Formulas Data A B 1 Units produced 18,000 2 Units sold 17,500 3 Selling price $ 450 4 Variable costs: 5 Manufacturing cost per unit produced: 6 Direct materials $ 30 7 Direct manufacturing labor 25 8 Manufacturing overhead 60 9 Marketing cost per unit sold 45 10 Fixed costs: 11 Manufacturing costs $1,200,000 12 Administrative costs 13 Marketing costs 965,450 1,366,400 1. Prepare a 2020 income statement for Regina Company using variable costing. 2. Prepare a 2020 income statement for Regina Company using absorption costing. 3. Explain the differences in operating incomes obtained in requirements 1 and 2. 4. Regina's management is considering implementing a bonus for the supervisors based on gross margin under absorption costing. What incentives will this bonus plan create for the supervisors? What modi- fications could Regina management make to improve such a plan? Explain briefly.