Exercise 6-12 (Algo) Variable Costing Income Statement; Reconciliation [LO6-2, LO6-3] Whitman Company has just completed its first year of operations. The company's absorption costing Income statement for the yea follows: Whitman Company Income Statement Sales (41,000 units x $41.60 per unit) Cost of goods sold (41,000 units x $19 per unit) Gross margin Selling and administrative expenses Net operating income $ 1,705,600 779,000 926,600 430,500 $ 496,100 The company's selling and administrative expenses consist of $307,500 per year in fixed expenses and $3 per unit sold in variable expenses. The $19 unit product cost given above is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($192,000 48,000 units) Absorption costing unit product cost $ 9 4 2 4 $ 19