Income Statements under Absorption Costing and Variable Costing Crazy Mountain Sports Inc. assembles and sells snowmobile engines. The company began operations on March 1 and operated at 100% of capacity during the first month. The following data summarize the results for March: Sales (19,000 units) Production costs (25,000 units): $2,850,000 Direct materials Direct labor Variable factory overhead Fixed factory overhead $1,387,500 665,000 332,500 222,500 2,607,500 Selling and administrative expenses: Variable selling and administrative expenses $404,200 Fixed selling and administrative expenses 156,500 560,700 If required, round interim per-unit calculations to the nearest cent. a. Prepare an income statement according to the absorption costing concept. Crazy Mountain Sports Inc. Absorption Costing Income Statement For the Month Ended March 31 Line Item Description Amount a. Prepare an income statement according to the absorption costing concept. Crazy Mountain Sports Inc. Absorption Costing Income. Statement For the Month Ended March 31 Line Item Description Amount b. Prepare an income statement according to the variable costing concept. Crazy Mountain Sports Inc. Variable Costing Income Statement For the Month Ended March 31 Line Item Description Amount Amount, 00000 b. Prepare an income statement according to the variable costing concept. Crazy Mountain Sports Inc. Variable Costing Income Statement For the Month Ended March 31 Line Item Description. Amount Amount Fixed costs: 100000 c. What is the reason for the difference in the amount of operating income reported in (a) and (b)? Under the method, the fixed manufacturing cost included in the cost of goods sold is matched with the revenues. Under all of the fixed manufacturing cost is deducted in the period in which it is incurred, regardless of the amount of inventory change. income statement will have a higher operating income. Thus, when inventory increases, the