Exercise 6-12 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 year follows: Whitman Company Income Statement Sales (38,000 units $42.10 per unit) Cost of goods sold (38,000 units $24 per unit) Gross margin Selling and administrative expenses Net operating income $1,599,800 912,000 687,800 475,000 $ 212,800 The company's selling and administrative expenses consist of $285,000 per year in fixed expenses and $5 per unit sold in variable expenses. The $24 unit product cost given above is computed as follows Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($288,00048,000 units) Absorption costing unit product cost 11 3 S 24 Required: 1. Redo the company's income statement in the contribution format using variable costing 2. Reconcile any difference between the net operating income on your variable costing income statement and the net operating income on the absorption costing income statement above Required 1 Required 2 Redo the company's income statement in the contribution format using variable costing Whitman Company Variable Costing Income Statement Sales $ 1,599,800 Variable expenses Variable cost of goods sold Indirect labor Commissions Advertising $ 864,000 528,000 144,000 192,000 1,728,000 Contribution margin (128,200) Fixed expenses Beginning merchandise inventory Depreciation Fixed manufacturing overhead Fixed selling and administrative expense 915,800 7,258,000 288,000 285,000 8,746,800 Net operating income 8,875,000 Required 1Required 2 Reconcile any difference between the net operating income on your variable costing income statement and the net operating income on the absorption costing income statement above. (Enter any losses or deductions as a negative value.) Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes $ 152,800 Variable costing net operating income Add: Fixed manufacturing overhead cost released from inventory under absorption costing Absorption costing net operating income $ 212,800