Horace Company manufacturers a professional-grade vacuum cleaner and began operations in 2017 . For 2017 , Horace budgeted to produce and sell 25,000 units. The company had no price, spending, or efficiency variances and writes off production-volume variance to cost of goods sold. Actual data for 2017 are given as follows: (Click the icon to view the actual data for 2017.) Read the requirements. Requirement 1. Prepare a 2017 income statement for Horace Company using variable costing. Complete the top half of the income statement first, then complete the bottom portion. (For amounts with a $0 balance, make sure to enter "0" in the appropriate cell.) Data table Requirements 1. Prepare a 2017 income statement for Horace Company using variable costing. 2. Prepare a 2017 income statement for Horace Company using absorption costing. 3. Explain the differences in operating incomes obtained in requirements 1 and 2. 4. Horace's management is considering implementing a bonus for the supervisors based on gross margin under absorption costing. What incentives will this bonus plan create for the supervisors? What modifications could Horace management make to improve such a plan? Explain briefly