OBJECTIVE 4 Problem 18.30 Absorption-and variable-costing Income Statements and camera CMA optics, in for large by customer used in space exploration. As the for the lenses are determined and considerably, the company uses a job costing system. labor hours, utiliz the Manufacturing overhead is applied to jobs on the basis of direct rates for 2015 and full-costing method. San Mateo's predetermined overhead 2016 were based on the following estimates. 2016 2015 32,500 Direct labor hours $325,000 $462,000 Direct labor cost $130,000 S176,000 Fixed manufacturing overhead Variable manufacturing overhead $162,500 $198,000 Jim Cimino, San Mateo's controller, would like to use variable (direct costing for internal reporting purposes as he believes statements prepared using variable costing are more appropri- ate for making product decisions. In order to explain the benefits of variable costing to the other members of San Mateo's management team, Cimino plans to convert the company's income statement from absorption costing to variable costing. He has gathered the following informa- tion for this purpose, along with a copy of San Mateo's 2015 and 2016 comparative income statement. San Mateo Optics, Inc. Comparative Income Statement For the Years 2015 and 2016 2015 2016 Net sales $1,140,000 S1,520,000 Cost of goods sold: Finished goods at January 1 16,000 25,000 Cost of goods manufactured 720,000 976,000 Total available 736,000 $1,001,000 Less: Finished goods at December 31 25,000 14.000