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: Units produced Units sold Year 1 25, cee 20, eee Year 2 25, eee 30,000 Sales (at 550 per unit) Year 1 Year 2 $1,000,000 $1,500,000 Cost of goods sold: Beginning inventory Add cost of goods manufactured (at $34 per unit) 170,000 850,000 850,000 1,020,000 Goods available for sale Less ending inventory (at $34 per unit) 850,000 170,000 Cost of goods sold 680,000 1,020,eee Gross margin Selling and administrative expenses 320,000 310.000 480.000 340.000 $ le, es 140, see Operating income *$3 per unit variable: $250,000 fixed each year. The company's $34 unit product cost is computed as follows: Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead (5358,eee + 25, e units) S8 1e 2 14 *$3 per unit variable, $250,000 fixed each year. The company's $34 unit product cost is computed as follows: Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead (535e,eee + 25, eee units) $8 10 2 14 Unit product cost $34 Required: 1. Prepare a variable costing Income statement for each year in the contribution format. Variable Costing Income Statement Year 1 Year 2 Variable expenses: Total variable expenses 0 0 0 0 Fixed expenses Total fixed expenses 0 2 Reconcile the absorption costing and variable costing operating income figures for each year. (Loss amounts should be indicated by a minus slgn.) Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes Year 2 Variable costing operating income (loss) Add: Fixed manufacturing overhead cost deferred in inventory under absorption costing Deduct Fixed manufacturing overhead cost released from inventory under absorption costing Absorption costing operating income $ 05 0