Less: Cost of goods sold $160,300 (1.45*70000) +(63000/75000*70000) Gross profit $49,700 Less: Selling and administrative expense Variable selling and administrative expense $24,500 Fixed selling and administrative expense $10,500 Total Selling and administrative expense $35,000 Net operating Income $14,700 7b. Income Statement-Absorption costing B. Income Statement-Variable costing Sales ($3*70,000) $210,000 Less: Variable cost Cost of Goods sold (1.45*70000) $101,500 Selling and administrative expense (210000-101500- $24,500 $126,000 84000) Contribution margin $84,000 Less: Fixed expenses Manufacturing overhead cost $63,000 Selling and administrative expense $10,500 Total fixed expenses $73,500 Net operating Income $10,500