Duif Company's absorption costing income statement for the last year of operations is presented below. Sales..........................................................................................$70,000

Less cost of goods sold:

Beginning inventory.............................................. 0

Add cost of goods manufactured..................48,000

Goods available for sale...................................48,000

Less ending inventory.......................................6,000

Cost of goods sold....................................................................42,000

Gross margin...............................................................................28,000

Less selling and admin. expenses........................................... 25,000

Net operating income................................................................$3,000

Data on units produced and sold for the year are given below.

Units in beginning inventory...................................0

Units produced....................................................8,000

Units sold.............................................................7,000

Variable manufacturing costs are $4 per unit. Fixed manufacturing overhead totaled $16,000 for the year. The fixed manufacturing overhead was applied to products at a rate of $2 per unit. Variable selling and administrative expenses were $3 per unit sold.

Required: Prepare a new income statement for the year using variable costing. Comment on the differences between the absorption costing and the variable costing income statements.