Purbasari uses FIFO actual costing system . The value of fixed manufacturing cost rate calculated at the end of the year through dividing the actual fixed manufacturing cost by the actual production units . Purbasari sold only 1 product type called matte -lipstick which has selling price $3/unit . Purbasari prepares income statement using absorption costing as below : 2016 2017 Revenues (Price @ $3) 3000 3600 Cost of goods sold : Beginning inventory 0 400 Variable manufacturing costs 700 500 Fixed manufacturing cost 700 700 Cost of goods available for sale 1400 1600 Deduct ending inventory (400 ) (240 Cost of goods sold 1000 1360 Gross margin 2000 2240 Operating costs : Variable operating costs 1000 1200 Fixed operating costs 400 400 Total operating costs 1400 1600 Operating income 600 640 Additional information 2016 2017 Production 1400 unit 1000 unit Required 1. Prepare income statement based on variable costing for 2016 and 2017 2. Prepare a numerical reconciliation and explanation of the difference between operating income under absorption costing and variable costing