King Company reports the following information for the year ending December 31: Sales $10,000 Long term rent - factory 500 Factory maintenance salary 200 Supervisors' salaries 300 Direct material used 100 Direct labor 400 Cutting bits used 2 Factory engineering research 10 Abrasives for machining 800 Depreciation: factory equipment S 100 30 Sales commissions Advertising Shipping expenses Admin exec salaries Admin clerical wages (variable) Fire insurance- factory equip Property taxes- Indirect labor 100 4,000 2,000 60 40 factory equip 100 300 Assume all variable costs fluctuate directly in proportion to sales volume, and that fixed costs are unaffected over a wide range of volume levels. There were no beginning or ending inventories. Required: 1. Categorize each cost item two ways: variable vs. fixed and product (COGS) vs. period (SGA) 2. Prepare a contribution income statement and a traditional (GAAP) income statement. 3. What would operating income have been if sales had been $10.5 million instead of $10 million? Which income statement did you use to help get your answer? Why