Morey Company has just completed its first year of operations. The company's absorption costing income statement for the year appears below: $1,350,000 MOREY COMPANY Income Statement Sales (40,000 units at $33.75 per unit) Cost of goods sold: Beginning inventory $ O Add cost of goods manufactured (50,000 units at $21 per unit) 1,050,000 1,050,000 Goods available for sale Less ending inventory (10,000 units at $21 per unit) 210,000 840,000 Gross margin Selling and administrative expenses 510,000 420,000 Operating income $ 90,000 The company's selling and administrative expenses consist of $300,000 per year in fixed expenses and $3 per unit sold in variable expenses. The company's $21 per unit product cost given above is computed as follows: Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead ($250,000 - 50,000 units) $10 4 2 5 Unit product cost $21 Required: 1. Redo the company's income statement in the contribution format using variable costing. Variable Costing Income Statement Variable expenses 0 0 Fixed expenses 0 0 $ 2. Reconcile any difference between the operating income on your variable costing income statement and the operating income on the absorption costing income statement above. Difference in operating income