D $2,400,000 16 17 Income statement: Absorption costing 18 19 Sales 20 Cost of goods sold: 21 Variable manufacturing costs 22 Fixed manufacturing costs 23 Total goods available for sale 24 Less ending inventory 25 Cost of goods sold 26 Gross profit 27 Selling expenses 28 Fixed selling expenses 29 Variable selling expenses 30 Total selling expenses 31 Operating income $1,400,000 315,000 $1,715,000 343,000 1,372,000 $1,028 000 $100,000 160,000 260,000 $768,000 34 Income statement Variable costing $2,400,000 $1,400,000 280,000 36 Sales 37 Cost of goods sold 38 Variable manufacturing costs 39 Less ending inventory 40 Variable cost of goods sold 41 Manufacturing margin 42 Variable selling expenses 43 Contribution margin 44 Foed costs 45 Food manufacturing costs 46 Faed selling expenses 47 Total fored costs 48 Operating income 1,120.000 $1,280,000 160,000 $1,120,000 $315,000 100.000 415000 $705,000 ob Order 14) Bob Orders VARCOSTVARCOST O ACABC what LU = = = BTU - - - $ % 18-23 Number Formatas lable Cell Styles Format Ces Clipboard insent Styles 114 X fo E F AG . 1 Explain why the operating income calculated by the absorption method is not the same 2 as that calculated by the variable method 9 To determine the effect of different levels of producation on the company's income, move to cell B7 (actual production) 10 on the VARCOST worksheet and change the number in B7 to different production levels given in the table below. 11 The first level 100,000, is the current level. What happens to the operating income on both statements as production 12 levels change? Enter the operating incomes in the following table, 14 Operating Income - January 15 Production Production Production Level Level Level 100,000 90,000 80,000 18 Absorption 19 Variable 21 Does the level of production affect income under either costing method? Explain your findings. - Bob Order Job Order ES VARCOST VARCOST O ABC ABC What O