Data table The company uses budgeted production as the denominator level and writes off any productionvolume variance to cost of goods sold. 2019 Sales 27,500 tons Production 55,000 tons Selling price $03 per ton Costs (all xed): Manufacturing $2,035,000 Operating lnonmanufaeturing} $104,000 2020\" 2?,500 tons 0 tons $93 per ton $2,035,000 $104,000 a Management adopted the policy, effective January 1, 2020, of producing only as much product as needed to ll sales orders. During 2020, sales were the same as for 2019 and were lled entirely from inventory at the start of 2020. It is the end of 2020. Z - Var Corporation began operations in January 2019. The company is so named because it has no variable costs. All its costs are fixed; they do not vary with output. Z - Var Corp. is located on the bank of a river and has its own hydroelectric plant to supply power, light, and heat. The company manufactures a synthetic fertilizer from air and river water and sells its product at a price that is not expected to change. It has a small staff of employees, all paid fixed annual salaries. The output of the plant can be increased or decreased by pressing a few buttons on a keyboard. The following budgeted and actual data are for the operations of Z - Var. (Click the icon to view the budgeted and actual data.) Read the requirements. Requirement 1. Prepare income statements with one column for 2019, one column for 2020, and one column for the 2 years together using (a) variable costing and (b) absorption costing. (Use parentheses or a minus sign for an operating loss.) Start by preparing the (a) variable costing income statement for 2019, 2020, and the 2 year total. 2019 2020 Total Revenue 2557500 2557500 5115000 Fixed costs: Manufacturing costs 2035000 2035000 4070000 Operating costs 04000 04000 208000 Total fixed costs 2139000 2139000 4278000 Operating income (loss) 418500 $18500 837000 Now prepare the (b) absorption costing income statement for 2019, 2020, and the 2 year total. (Enter a "0" for any $0 balances. Use parentheses or a minus sign for an operating loss. Label each variance as favorable (F) or unfavorable (U). Use units of production as the denominator level in the allocation rate.)Now prepare the (b) absorption costing income statement for 2019, 2020, and the 2 year total. (Enter a "0" for any $0 balances. Use parentheses or a minus sign for an operating loss. Label each variance as favorable (F) or unfavorable (U). Use units of production as the denominator level in the allocation rate.) 2019 2020 Total Revenue 2557500 2557500 5115000 Cost of goods sold Beginning inventory 0 1017500 1017500 Allocated fixed manufacturing costs 2035000 2035000 4070000 Deduct ending inventory 1017500 0 1017500 Adjustment for production-volume variance Total cost of goods sold 1017500 3052500 4070000 Gross margin 1540000 495000) 1045000 Operating costs 104000 104000 208000 Operating income (loss) 1436000 599000 837000Requirement 2. What is the breakeven point under (a) variable costing and (b) absorption costing? Start by calculating the breakeven point under (a) variable costing. (Round your answer up to the nearest unit.) Breakeven point Total fixed costs Contribution margin per ton = under variable costing Now calculate the breakeven point under (b) absorption costing. Enter the formula labels and amounts needed to calculate the absorption costing breakeven sales. (Assume "P" is the production level in units. Abbreviations used: MOH = manufacturing overhead, CM = contribution margin.) )1= Revenue P )1= (Round your answer up to the nearest unit.) The breakeven point under absorption costing when sales are tons is unitsRequirement 3. What inventory costs would be carried in the balance sheet on December 31, 2019 and 2020, under each method? (For accounts with a $0 balance, enter a $0 in the appropriate cell.) December 31, 2019 December 31,2020 Variable costing Absorption costing (n on manufacturing) Requirement 4. Assume that the performance of the top manager of the company IS evaluated and rewarded largely on the basis of reported operating income Which costing method would the manager prefer? Why? Operating Income is affected by both production and sales under V Most managers would prefer costing because their performance in any given reporting period, at least in the short run' is influenced by