Austin Inc. has prepared the following income statement using absorption accounting.

	Units	$ per Unit	$
Revenue	600,000	4.00	$2,400,000
COGS:
Beginning inventory	40,000		104,000
Variable manufacturing costs	585,000	2.00	1,179,000
Fixed manufacturing costs	585,000	0.60	351,000
	625,000		1,625,000
Less: Ending inventory	(25,000)	2.60	(65,000)
Adjustment for production-volume variance			9,000 U
COGS	600,000		1,569,000
Gross margin			831,000
Variable marketing costs	600,000	0.50	300,000
Fixed SG&A			120,000
Operating income			$411,000

Please Show Work

1. Using the above information, prepare an income statement using variable costing.
2. Why is the operating income different between variable costing and absorption costing in this situation? Provide a reconciliation.