Barbara Jones, CEO of Ivanhoe Industries, is concerned about the recent volatility in the companys operating income. She believes that since the number of units sold has been fairly stable over the past three years that operating income also should have been stable. Barbara asked Michael Brown, Ivanhoe's inventory manager, to help her understand the issue. Michael reviewed the companys records and compiled the following changes to Finished Goods Inventory (in units) for the years 2019, 2020, and 2021.

		Year
		2019			2020			2021
Beginning inventory		1,000			2,000			500
Production		40,000			38,000			40,000
Sales		( 39,000)			( 39,500)			( 39,500)
Ending inventory		2,000			500			1,000

Michael also gathered the 2019 income statements prepared using absorption costing and variable costing, which follow.

Income StatementAbsorption Costing
Sales		$	5,850,000
Cost of goods sold
Units in beginning inventory			( 91,000)
Units sold from current year production			( 3,458,000)
Total cost of goods sold			( 3,549,000)
Gross margin			2,301,000
Selling expense			( 605,000)
Operating Income		$	1,696,000
Income StatementVariable Costing
Sales		$	5,850,000
Variable production expenses			( 2,067,000)
Variable selling expenses			( 156,000)
Contribution margin			3,627,000
Fixed manufacturing expenses			( 1,520,000)
Fixed selling expenses			( 449,000)
Operating income		$	1,658,000

Prepare variable and absorption costing income statements for 2020 and 2021. Assume that sales price remains constant across all years. (Round answers to 0 decimal places, e.g. 5,275.)

Income StatementAbsorption Costing
		2020		2021
select an income statement item Operating IncomeVariable costs - sellingGross marginContribution marginVariable costs - productionSalesCost of goods soldFixed selling costsFixed manufacturing costs		$ enter a dollar amount		$ enter a dollar amount
select an income statement item Fixed selling costsVariable costs - productionGross marginContribution marginSalesVariable costs - sellingFixed manufacturing costsOperating IncomeCost of goods sold		enter a dollar amount		enter a dollar amount
select a summarizing line for the first part Cost of goods soldFixed selling costsGross marginVariable costs - productionOperating IncomeVariable costs - sellingSalesFixed manufacturing costsContribution margin		enter a total amount for the first part		enter a total amount for the first part
select an income statement item Variable costs - productionFixed manufacturing costsCost of goods soldOperating IncomeGross marginFixed selling costsVariable costs - sellingContribution marginSales		enter a dollar amount		enter a dollar amount
select an income statement item Fixed manufacturing costsSalesFixed selling costsCost of goods soldOperating IncomeGross marginContribution marginVariable costs - sellingVariable costs - production		enter a dollar amount		enter a dollar amount
select a closing name for this statement Cost of goods soldFixed selling costsSalesVariable costs - productionContribution marginOperating IncomeVariable costs - sellingFixed manufacturing costsGross margin		$ enter a total amount for this statement		$ enter a total amount for this statement

Income StatementVariable Costing
		2020		2021
select an income statement item Fixed manufacturing costsContribution marginVariable costs - sellingVariable costs - productionCost of goods soldFixed selling costsGross marginSalesOperating Income		$ enter a dollar amount		$ enter a dollar amount
select an income statement item Fixed manufacturing costsCost of goods soldOperating IncomeSalesGross marginVariable costs - sellingContribution marginVariable costs - productionFixed selling costs		enter a dollar amount		enter a dollar amount
select an income statement item Variable costs - sellingSalesOperating IncomeFixed selling costsGross marginCost of goods soldVariable costs - productionFixed manufacturing costsContribution margin		enter a dollar amount		enter a dollar amount
select a summarizing line for the first part Cost of goods soldVariable costs - sellingContribution marginSalesFixed manufacturing costsFixed selling costsGross marginVariable costs - productionOperating Income		enter a total amount for the first part		enter a total amount for the first part
select an income statement item Fixed selling costsFixed manufacturing costsCost of goods soldOperating IncomeGross marginVariable costs - productionVariable costs - sellingSalesContribution margin		enter a dollar amount		enter a dollar amount
select an income statement item Gross marginSalesFixed manufacturing costsContribution marginCost of goods soldOperating IncomeVariable costs - sellingFixed selling costsVariable costs - production		enter a dollar amount		enter a dollar amount
select a closing name for this statement Variable costs - productionCost of goods soldVariable costs - sellingSalesFixed manufacturing costsContribution marginFixed selling costsOperating IncomeGross margin		$ enter a total amount for this statement		$ enter a total amount for this statement