Question 2 (10 marks) The cost structure for Chiang Company, which began operations on January 1, is provided below: Direct materials Direct labor Manufacturing overhead: Variable Fixed $ 18 per unit $ 14 per unit $ 8 per unit $20,000 ($5.00 per unit) Fixed selling and administrative Variable selling and administrative costs are $4 per unit sold. $ 12,000 During the year, the company produced 4,000 units and sold 3,500 units at the $60 selling price. Required: 1) Prepare an income statement under absorption costing. (4 marks) 2) Prepare an income statement under variable costing. (4 marks) 3) Explain the difference between the two income amounts. (2 marks) 4) What absorption costing disadvantage does this exercise emphasize? (2 marks)