Absorption Statement Absorption costing does not distinguish between variable and fixed costs. All manufacturing costs are included in the cost of goods sold Saxon, Inc. Absorption Costing Income Statement For the Year Ended December 31 Sales $1,275,000 Cost of goods sold: Cost of goods manufactured $800,000 Ending Inventory (120,000) Total cost of goods sold (680,000) Gross profit $595,000 Selling and administrative expenses (303,000) Operating income $299,000 Variable Statement Under variable conting, the cost of goods manufactured includes only variabile manufacturing costs. This type of income statement includes a computation af manufacturing margin Saxon, Inc. Variable Costing Income Statement For the Year Ended December 31 Sales $1,275,000 Variable cost of goods sold Variable cost of goods manufactured $560,000 Ending Inventory (54,000) Total variable cost of goods sold (476,000) Manufacturing margin $799,000 Sales $1,275,000 Variable cost of goods sold: Variable cost of goods manufactured $560,000 Ending inventory (14,000) Total variable cost of goods sold (476,000) Manufacturing margin $799,000 Variable selling and administrative expenses (238,000) Contribution margin 5561,000 Fixed costs Foed manufacturing coats $240,000 Fixed selling and administrative expenses 65,000 Totalfixed costs (305,000) Operating income $256.000 Method Comparison Review the income statements on the Absorption Statemene and Variable Statement, then complete the following table. The company's sales priceperunt is 575, and the number of unitsin ending Inventory is 3,000. There was no beginning inventory Item Amount Number of units wold Variable sales and administrative cost per unit Number of units manufactured Variable cost of goods manufactured per unit Foxed manufacturing cost per unit