Heat Inc. has prepared the following absorption costing income statement.

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1. Heat Inc. has prepared the following absorption costing income statement. Revenue Beginning inventory Variable manufacturing costs Fixed manufacturing costs Goods available for sale Less ending inventory Production-volume variance Cost of goods sold Gross margin Variable marketing costs Fixed SG&A Operating income Units 210,000 16,000 214,000 214,000 230,000 (20,000) 210,000 210,000 $ per unit 42 30 23 7 30 2.1 480,000 (600,000) (Z,000) 441,000 $437,000 a. Using the above information, prepare an income statement using variable costing. b. Why is the operating income different between variable costing and absorption costing in this situation? Provide a reconciliation of operating income under absorption costs to that under variable costing.