Opu and Mamun started a new business manufacturing hair dying cream. They both kept separate set of accounts of their business. However, at the end of the first year of operations their net incomes didnt match. A fight was about to start between the two owing to discrepancy in net incomes. Rafsan, their friend, asked them to present their income statements. As such information relating to the businesss the first year of operation follow: Production in units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26000 Sales in units. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22000 Variable manufacturing cost per unit produced. . . . . . . . . . . . . $7 Variable selling and administrative expense per unit sold. . . . . $2 Fixed manufacturing overhead costs (total) . . . . . . . . . . . . . . . $307700 Using the above data, Mamun presented the following income statement: Sales (22000 units) . . . . . . . . . . . . . . . . . . . . . . . . . . $990000 Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . $414361.53846153844 Gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $575638.4615384615 Selling and administrative expenses . . . . . . . . . . . . $232600 Net operating income. . . . . . . . . . . . . . . . . . . . . . . . . $343038.4615384615

Opu, on the other hand asked for your help to prepare a variable costing income statement. Prepare a variable costing income statement of Opu and Mamun (5 marks) and explain why the net income between the two methods differ (2 marks).