Income Statements under Absorption Costing and Variable Costing Fresno Industries Inc. manufactures and sells high-quality camping tents. The company began operations on January 1 and operated at 100% of capacity (150,000 units) during the first month, creating an ending inventory of 20,000 units. During February, the company produced 130,000 units during the month but sold 150,000 units at $500 per unit. The February manufacturing costs and selling and administrative expenses were as follows: Unit Total Number of Units Cost Cost Manufacturing costs in February 1 beginning inventory: 20,000 $275.00 Variable $5,500,000 Fixed 20,000 26.00 520,000 $301.00 $6,020,000 Total Manufacturing costs in February: 130,000 $275.00 $35,750,000 Variable 3,900,000 30.00 Fixed 130,000 $305.00 $39,650,000 Total Selling and administrative expenses in February: Variable 150,000 $20.00 $3,000,000 1.30 195,000 Fixed 150,000 $21.30 $3,195,000 Total 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 Sales 5,313,000X Cost of goods sold: Beginning inventory Cost of goods manufactured Total cost of goods sold Gross profit Selling and administrative expenses v Operating income 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 Sales 75,000,000 Variable cost of goods sold Manufacturing margin Variable selling and administrative expenses Contribution margin Fixed costs: Fixed manufacturing costs Fixed selling and administrative expenses Total fixed costs v Operating income