Examine the Cleary Company's simplified income statement based on variable costing. Assume that the budgeted volume for absorption costing in 20X0 and 20X1 was 1,460 units and that total fixed costs were identical in 20X0 and 20X1. There is no beginning or ending work in process. E (Click the icon to view the simplified income statement.) Requirements 1. Prepare an income statement based on absorption costing. Assume that actual fixed costs were equal to budgeted fixed costs. 2. Explain the difference in operating income between absorption costing and variable costing. Be specific. Requirement 1. Prepare an income statement based on absorption costing. Assume that actual fixed costs were equal to budgeted fixed costs. Cleary Company Absorption Costing Income Statement For the Year Ended December 31, 20X1 Sales Beginning inventory Cost of goods manufactured, at standard Cost of goods available for sale Ending inventory Cost of goods sold, at standard Gross profit , at standard Production-volume variance Gross profit, at "actual" Selling and administrative expenses Data table $ 16,250 $ 560 8,470 $ 9,030 280 Year Ended December 31, 20X1 Sales, 1,250 units at $13 Deduct variable costs Beginning inventory, 80 units at $7 Variable manufacturing cost of goods manufactured, 1,210 units at $7 Variable manufacturing cost of goods available for sale Ending inventory, 40 units at $7 Variable manufacturing cost of goods sold Variable selling and administrative expenses Total variable costs Contribution margin Deduct fixed costs Fixed factory overhead at budget Fixed selling and administrative expenses Total fixed costs $ 8,750 700 9,450 $ 6,800 $ 4,672 400 5,072 $ 1,728 Operating income Print Done