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 (210,000 units) during the first month, creating an ending inventory of 21,000 units. During February, the company produced 189,000 units during the month but sold 210,000 units at $520 per unit. The February manufacturing costs and selling and administrative expenses were as follows: Number of Units Unit Total Cost Cost Manufacturing costs in February 1 beginning inventory: Variable 21,000 $260.00 $5,460,000 Fixed 21,000 35.00 735,000 Total $295.00 $6,195,000 Manufacturing costs in February: Variable Fued Total Selling and administrative expenses in February: Variable Fixed Total 189,000 $260.00 $49,140,000 189,000 40.40 7,635,600 $300.40 $56,775,600 210,000 $26.90 $5,649,000 210,000 5.00 1,050,000 $31.90 $6,699,000 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 281 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 Fond costs Fixed costs: 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) feed manufacturing cost is deducted in the period in which it is incurred, regardless of the amount of inventory change. Thus, when inventory decreases, the U income statement will have a lower operating income. all of the