Morey Company has just completed its first year of operations. The company's absorption costing income statement for the year appears below: MOREY COMPANY Income Statement $1,350,000 Sales (40,000 units at $33. 75 per unit) Cost of goods sold: Beginning inventory Add cost of goods manufactured (50,000 units at $21 per unit) $ 0 1,050,000 Goods available for sale Less ending inventory (10,000 units at $21 per unit) 1,050,000 210,000 840,000 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 Fixed expenses 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. Variable costing operating income Add: Fixed manufacturing overhead cost deferred in in-ventory under absorption costing Absorption costing operating income