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 (198,000 units) during the first month, creating an ending inventory of 16,000 units. During February, the company produced 182,000 units during the month but sold 198,000 units at $560 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: 16,000 $280.00 Variable $4,480,000 16,000 39.00 Fixed 624,000 $319.00 $5,104,000 Total Manufacturing costs in February: Variable 182,000 $280.00 $50,960,000 182,000 45.00 8,190,000 Fixed $325.00 $59,150,000 Total Selling and administrative expenses in February: 198,000 30.00 Variable $5,940,000 792,000 198,000 4.00 Fixed 34.00 $6,732,000 Total 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 Cost of goods sold: III > 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 Previous Check My Work 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 $ $ 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 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 income statement will have a lower Operating income