\begin{tabular}{|l|l|r|r|} \hline 1 & Sales (35,000 units) & & $10,500,000.00 \\ \hline 2 & Production costs (41,000 units): & \\ \hline 3 & Direct materials & $4,100,000.00 & \\ \hline 4 & Direct labor & 2,255,000.00 & \\ \hline 5 & Variable factory overhead & 1,025,000.00 & \\ \hline 6 & Fixed factory overhead & 615,000.00 & 7,995,000.00 \\ \hline 7 & Selling and administrative expenses: & & \\ \hline 8 & Variable selling and administrative expenses & $1,140,000.00 & \\ \hline 9 & Fixed selling and administrative expenses & 225,000.00 & 1,365,000.00 \\ \hline & & & \\ \hline \end{tabular} Labels Fixed costs For the Month Ended March 31 March 31 Amount Descriptions Contribution margin Contribution margin ratio Cost of goods sold Fixed factory overhead costs Fixed selling and administrative expenses Gross profit Operating income Loss from operations Manufacturing margin Planned contribution margin Sales Sales mix Selling and administrative expenses Total fixed costs Variable cost of goods sold Variable selling and administrative expenses Crazy Mountain Sports Inc. Absorption Costing Income Statement (Label) 1 2 3 4 5 Crazy Mountain Sports Inc. Variable Costing Income Statement (Label) 1 2 3 4 5 6 (Label) 7 8 9 10 Crazy Mountain Sports Inc. Variable Costing Income Statement (Label) 1 2 3 4 5 6 (Label) 7 8 9 10 What is the reason for the difference in the amount of Operating income reported in (a) and (b)? Check all that apply. Under absorption costing, when inventory increases, the income statement will have a higher Operating income than will the variable costing income statement. Under variable costing, the units that were produced but unsold include fixed factory overhead cost, which is not included in cost of goods sold. Under variable costing, all of the fixed factory overhead cost is deducted in the period in which it is incurred, regardless of the amount of inventory change. There is no difference; the Operating income reported in (a) and (b) is the same. Under absorption costing, when inventory increases, the income statement will have a lower Operating income than will the variable costing income statement