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 (25,000 units) Cost of goods sold: Cost of goods manufactured $2,000,000 Less ending inventory (5,000 units) $1,515,000 252,500 Cost of goods sold 1,262,500 $737,500 Gross profit Selling and administrative expenses Income from operations 141,000 $596,500 a. Prepare a variable costing income statement, assuming that the fixed manufacturing costs were $90,000 and the variable selling and administrative expenses were $64,000. 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 Sales Variable cost of goods sold: Variable cost of goods manufactured Less ending inventory Variable cost of goods sold Manufacturing margin Variable selling and administrative expenses Contribution margin Fixed costs: Fixed manufacturing costs Fixed selling and administrative expenses Income from operations b. Reconcile the absorption costing income from operations of $596,500 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