Q-7: Klumper Company has just completed its first year of operations. The company's absorption costing income statement for the year appears below: Morey Company Income Statement Sales (40,000 units at $33.75 per unit) . $1,350,000 Cost of goods sold: Beginning inventory Nil Add cost of goods manufactured 1.050.000 (50,000 units at $21 per unit) Goods available for sale.. 1,050,000 Less ending inventory (10,000 units at $21 per unit) 210.000 840,000 Gross margin 510,000 Selling and administrative expenses -420.000 Net operating income $ 90,000 The company's selling and administrative expenses consist of $300,000 per year in fixed expenses and $3 per unit sold in variable expenses. The company's $21 per unit product cost given above is computed as follows: Direct materials ..S10 Direct labour Variable manufacturing overhead 2 Fixed manufacturing overhead (S250,000 / 50,000 units) 5 Unit product cost $21 Required: Redo the company's income statement in the contribution format using variable costing. Sontion LOY