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 (202,000 units) during the first month, creating an ending inventory of 17,000 units. During February, the company produced 185,000 units during the month but sold 202,000 units at $600 per unit. The February manufacturing costs and selling and administrative expenses were as follows: Number of Unit Total Units Cost Cost Manufacturing costs in February 1 beginning inventory: Variable 17,000 $300.00 $5,100,000 Fixed 17,000 21.00 357,000 Total $321.00 $5,457,000 Manufacturing costs in February: Variable 185,000 $300.00 $55,500,000 Fixed 185,000 24.20 4,477,000 Total $324.20 $59,977,000 Selling and administrative expenses in February: Variable 202,000 16.10 $3,252,200 Fixed 202,000 4.00 808,000 Total 20.10 $4,060,200 This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.a. Prepare an income statement according to the absorption costing concept for February. Enter all amounts as positive numbers. Fresno Industries Inc. Absorption Costing Income Statement For the Month Ended February 28 Sales Cost of goods sold: Beginning inventory Cost of goods manufactured Total cost of goods sold Gross profit Selling and administrative expenses Operating income b. Prepare an income statement according to the variable costing concept for February. Enter all amounts as positive numbers. Fresno Industries Inc. Variable Costing Income Statement For the Month Ended February 28 Sales 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 Operating income c. What is the reason for the difference in the amount of Operating income reported in (a) and (b)? Under the absorption costing v method, the fixed manufacturing cost included in the cost of goods sold is matched with the revenues. Under variable costing v , all of the 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 absorption costing V income statement will have a lower Operating income