On July 31, the end of the first month of operations, Rhys Company prepared the following income statement, based on the absorption costing concept:

Sales (21,000 units)					$1,575,000
Cost of goods sold:
	Cost of goods manufactured		$1,193,750
	Less ending inventory (4,000 units)		191,000
	Cost of goods sold				1,002,750
Gross profit					$572,250
Selling and administrative expenses					117,000
Income from operations					$455,250

a. Prepare a variable costing income statement, assuming that the fixed manufacturing costs were $75,000 and the variable selling and administrative expenses were $53,000. In your computations, round unit costs to two decimal places and round final answers to the nearest dollar.

Rhys Company
Income Statement-Variable Costing
For the Month Ended July 31
Variable cost of goods sold:
Fixed costs:
Income from operations		b. Reconcile the absorption costing income from operations of $455,250 with the variable costing income from operations determined in (a).

Reconciliation of Absorption and Variable Costing Income
Absorption costing income from operations
Variable costing income from operations
Difference