Knox Corporation manufactures an item. The cost structure is: Variable cost per unit Manufacturing $100 Total fixed cost $800,000 Selling & Administrative $30 $203,000 In its first year of operations, Knox Corporation produced 70,000 items and sold 64,000 at $200 each. Part 1: What is the contribution margin at the end of the first year of operations under the variable costing method? Part 2: Which costing method (variable or absorption) will generate a higher net operating income in Knox Corporation's first year of operations and by how much? Hint: See page 6-21 Illustration 6A-5 for Variable Costing model and page 6-20 Illustration 6A-4 for guidance on Absorption Costing model