E'Lonte Company began operations this year. During this first year, the company produced 300,000 units and sold 250,000 units. Its income statement under absorption costing for this year follows. Problem 19-2B Variable costing income statement and conversion to absorption costing income P2 P3 $4,500,000 Sales (250,000 units x $18 per unit)........ Cost of goods sold Beginning inventory .............. Cost of goods manufactured (300,000 units x $7.50 per unit).............. Cost of goods available for sale............ ............ . Ending inventory (50,000 X $7.50)................ .. Cost of goods sold .............. Gross margin ........... Selling and administrative expenses. Net income............. $ 0 2,250,000 2,250,000 375,000 3 1,875,000 2,625,000 2.200,000 $ 425,000 UNI 766 Chapter 19 Variable Costing and Analysis Additional Information a. Selling and administrative expenses consist of $1.200,000 in annual fixed expense variable selling and administrative expenses. b. The company's product cost of $7.50 per unit is computed as follows. 100 in annual fixed expenses and 54 per unit in $1.60 per unit 51.50 per unit Direct materials. Direct labor............... $2.00 per unt $2.40 per unit Variable overhead. Fixed overhead ($450,000/300.000 units)...... Required 1. Prepare the company's income statement under variable costing. de sting (from part 1) and the 2. Explain any difference between the company's income under variable costing (from part 1 income reported above