During Durton Companys first two years of operations, the company reported absorption costing operating income as shown below. Production and cost data for the two years are given:

MANAGERIAL ACCOUNTING P (8-11) During Durton Company's first two years of operations, the company reported absorption costing operating income as shown below. Production and cost data for the two years are given. Year 2 25, 000 30, 000 ear Units produced 25, 000 Units sold 20, 000 The company' s $34 unit product cost is computed as follows Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead 10 14 ($350, 000 25, 000 units) Unit product cost $34 MANAGERIAL ACCOUNTING P (8-11) Iear Year Sales (at $50 per unit) Cost of goods sold: Beginning inventory Add cost of goods manufactured (at $34 per 1,000,000 $1,500,000 170, 000 850, 000 850,000 unit) 850, 000 170, 000 680, 000 320, 000 310, 000 10, 000 Goods available for sale 1, 020, 000 Less ending inventory (at $34 per unit) Cost of goods sold Gross margin 1,020, 000 480, 000 340, 000 Selling and administrative expenses* S 140, 000 Operating income #83 per unit variable; $250,000 fixed each year Required: 1.Prepare a variable costing income statement for each year in the contribution format. 2.Reconcile the absorption costing and variable costing operating income figures for each year