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 (28,800 x $101) Manufacturing costs (28,800 units): $2,908,800 Direct materials Direct labor Variable factory overhead Fixed factory overhead Fixed selling and administrative expenses62,700 Variable selling and administrative expenses75,800 1,751,040 414,720 192,960 230,400 The company is evaluating a proposal to manufacture 32,000 units instead of 28,800 units, thus creating an Inventory, October 31 of 3,200 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 28,800 and 32,000 units are manufactured in the absorption costing format. If an amount box does not require an entry leave it blank or enter "O". Marshall Inc Absorption Costing Income Statement For the Month Ending October 31 28,800 Units Manufactured 32,000 Units Manufactured Cost of goods sold: Income from operations a. 2. Prepare an estimated income statement, comparing operating results if 28,800 and 32,000 units are manufactured in the variable costing format. If an amount box does not require an entry leave it blank or enter O" Marshall Inc. Variable Costing Income Statement For the Month Ending October 31 28,800 Units Manufactured 32,000 Units Manufactured Variable cost of goods sold: Fixed costs Total fixed costs b. What is the reason for the difference in income from operations 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 overhead cost included in the - The difference can also be explained by the amount of inventory