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 (20,000 units) $1,200,000 Cost of goods sold: Cost of goods manufactured $930,000 Less ending inventory (4,000 units) 155,000 Cost of goods sold 775,000 Gross profit $425,000 Selling and administrative expenses 112,000 Income from operations $313,000

a. Prepare a variable costing income statement, assuming that the fixed manufacturing costs were $72,000 and the variable selling and administrative expenses were $51,000. In your computations, round unit costs to two decimal places and round final answers to the nearest dollar.

b. Reconcile the absorption costing income from operations of $313,000 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	$