Fresno Industries Inc. manufactures and sells high-quality camping tents. The company began operations on January 1 and operated at 100% of capacity (41,800 units) during the first month, creating an ending inventory of 3,800 units. During February, the company produced 38,000 units during the month but sold 41,800 units at $105 per unit. The February manufacturing costs and selling and administrative expenses were as follows: Manufacturing costs in February 1 beginning inventory: Variable Fixed Total Manufacturing costs in February: Variable Fixed Total Selling and administrative expenses in February: Variable Fixed Total Number of Units Unit Total Cost Cost 3,800 $42.00 $159,600 3,800 16.00 60,800 $58.00 $220,400 38,000 $42.00 $1,596,000 38,000 17.60 668,800 $59.60 $2,264,800 41,800 $20.80 $869,440 41,800 7.00 292,600 $27.80 $1,162,040 a. Prepare an income statement according to the absorption costing concept for the month ending February 28. Fresno Industries Inc. Absorption Costing Income Statement For the Month Ended February 28 Cost of goods sold: b. Prepare an income statement according to the variable costing concept for the month ending February 28. Fresno Industries Inc. Variable Costing Income Statement For the Month Ended February 28 Fixed costs: c. What is the reason for the difference in the amount of operating income reported in (a) and (b)? Under the D method, the fixed manufacturing cost included in the cost of goods , all of the fixed manufacturing cost sold is matched with the revenues. Under is deducted in the period in which it is incurred, regardless of the amount of inventory change. Thus, when inventory decreases, the lower operating income. income statement will have a