Estimated Income Statements, using Absorption and Variable Costing } Prior to the first month of operations ending October 31, Marshall Inc. estimated the following operating results: Sales (13,400 x $63) $1,159,200 Manufacturing costs (18,400 units): Direct materials 699,200 Direct labor 165,600 Variable factory overhead 77,280 Fixed factory overhead 92,000 Fixed selling and administrative expenses 25,000 Variable selling and administrative expenses 30,300 The company is evaluating a proposal to manufacture 20,000 units instead of 18,400 units, thus creating an ending inventory of 1,600 units. Manufacturing the additional units will ) not change sales, unit variable factory overhead costs, total fixed factory overhead cost, or total selling and administrative expenses. a. 1. Prepare an estimated income statement, comparing operating results if 18,400 and 20,000 units are manufactured in the absorption costing format. If an amount box does not require an entry leave it blank. Marshall Inc. Absorption Costing Income Statement For the Month Ending October 31 18,400 Units Manufactured 20,000 Units Manufactured Sales V Cost of goods sold: Q Q Cost of goods manufactured V E E v Marshall Inc. Absorption Costing Income Statement For the Month Ending October 31 18,400 Units Manufactured 20,000 Units Manufactured Sales $ Cost of goods sold: Cost of goods manufactured Inventory, October 31 10 0 a. 2. Prepare an estimated income statement, comparing operating results if 18,400 and 20,000 units are manufactured in the variable costing format. If an amount box does not require an entry leave it blank. Marshall Inc. Variable Costing Income Statement For the Month Ending October 31 18,400 Units Manufactured 20,000 Units Manufactured Sales Variable cost of goods sold: Variable cost of goods manufacturedMarshall Inc. Variable Costing Income Statement For the Month Ending October 31 18,400 Units Manufactured 20,000 Units Manufactured Sales $ Variable cost of goods sold: Variable cost of goods manufactured Fixed costs: 10000 1080 Total fixed costs b. What is the reason for the difference in operating income reported for the two levels of production by the absorption costing income statement? The increase in income from operations under absorption costing is caused by the allocation of overhead cost over a _ number of units. Thus, the cost of goods sold is . The difference can also be explained by the amount of overhead cost included in the