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 (47,300 units) during the first month, creating an ending inventory of 4,300 units. During February, the company produced 43,000 units during the month but sold 47,300 units at $100 per unit. The February manufacturing costs and selling and administrative expenses were as follows: Number of Unit Units Total Cost Cost Manufacturing costs in February 1 beginning inventory: Variable 4,300 $40.00 $172,000 Fixed 4,300 15.00 Total $55.00 64,500 $236,500 Manufacturing costs in February: Variable Fixed Total 43,000 $40.00 $1,720,000 43,000 16.50 709,500 $56.50 $2,429,500 Selling and administrative expenses in February: Variable 47,300 $19.50 $922,350 Fixed 47,300 7.00 331,100 Total $26.50 $1,253,450 a. Prepare an income statement according to the absorption costing concept for the month ending February 28. Fresno Industries Inc. 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 Line Item Description Cost of goods sold: Amount Amount 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 Line Item Description Amount Amount $ S 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 Line Item Description Amount Amount $ 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 fixed manufacturing cost is deducted in the period in which it is incurred, regardless of the amount of inventory change. Thus, when inventory decreases, the income statement will have a lower operating income. all of the '