Alderman Company uses standard costing. Tim Fielding, the new president of Alderman Company, is presented with the following data for 2017: (Click the icon to view the data.) Read the requirements. Data table Alderman Company Income Statements for the Year Ended December 31, 2017 Variable Costing Absorption Costing Revenues Cost of goods sold (at standard costs) Fixed manufacturing overhead (budgeted) Fixed manufacturing overhead variances (all unfavorable): Spending Production volume $ 9,200,000 $ 9,200,000 4,670,000 1,000,000 5,885,000 0 90,000 90,000 0 380,000 1,550,000 1,550,000 Total marketing and administrative costs (all fixed) 7,310,000 7,905,000 Total costs 1,890,000 $ 1,295,000 Operating income Inventories (at standard costs) December 31, 2016 S 955,000 $ 1,705,000 December 31, 2017 50,000 205,000 Requirements 1. At what percentage of denominator level was the plant operating during 2017? 2. How much fixed manufacturing overhead was included in the 2016 and the 2017 ending inventory under absorption costing? 3. Reconcile and explain the difference in 2017 operating incomes under variable and absorption costing. 4. Tim Fielding is concerned: He notes that despite an increase in sales over 2016, 2017 operating income has actually declined under absorption costing. Explain how this occurred