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 (14.400 x 550) $720,000 Manufacturing costs (14,400 units): Direct materials 437.760 Direct labor 103,680 Variable factory overhead 48,960 Fixed factory overhead 57,600 Fixed selling and administrative expenses 15,700 Variable selling and administrative expenses 19,000 The company is evaluating a proposal to manufacture 16,000 units instead of 14.400 units, thus creating an ending inventory of 1.600 units. Manufacturing the additional units will not change sales, unit vanable factory overhead costs, total food factory overhead cost or total selling and administrative expenses. a. 1. Prepare an estimated income statement, comparing operating results if 14,400 and 16.000 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 14,400 Units Manufactured 16,000 Units Manufactured Cost of goods soldi Win 01 3. 2. Prepare an estimated income statement comparing operating results14400 15.000 units are mantractured 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 14,400 Units Manufactured 10,000 Units Manufactured Variable cost of goods solde Marshall Inc. Absorption Costing Income Statement For the Month Ending October 31 14,400 Units Manufactured 16,000 Units Manufactured Cost of goods soldi *. 2. Prepare an estimated income statement, comparing operating results if 14,400 and 16,000 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 14,400 Units Manufactured 16,000 Units Manufactured Variable cost of goods sold bin ini i Fixed costs Total foxed costs b. What is the reason for the difference in operating Income reported for the belevels of production by the absorption costing Income statement? The Increase in income from operations under absorption costing caused by the location of cost over number of units. Thus, the cost of goods soldi also be explained by the amount of overhead cost included in the overhead The difference can Inventory