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 (37,400 units) during the first month, creating an ending inventory of 3,400 units. During February, the company produced 34,000 units during the month but sold 37,400 units at $80 per unit. The February manufacturing costs and selling and administrative expenses were as follows: Number of Units Unit Cost Total Cost Manufacturing costs in February 1 beginning inventory: Variable 3,400 $32.00 $108,800 Fixed 3,400 12.00 40,800 $44.00 $149,600 Total Manufacturing costs in February: Variable 34,000 $32.00 $1,088,000 Fixed 34,000 13.20 448,800 Total $45.20 $1,536,800 Selling and administrative expenses in February: Variable 37,400 $15.60 $583,440 Fixed 37,400 7.00 261,800 Total $22.60 $845,240 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 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 the month ending February 28. 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