ReadiClean Company began operations in 2013. The company manufacturers a professionalgrade vacuum cleaner and can make up to 21,000 units each year. Actual data for 2013 are given as follows:

Units produced	21,000
Units sold	15,500
Selling price	$418
Variable costs:
Manufacturing cost per unit produced
Direct materials	26
Direct manufacturing labor	21
Manufacturing overhead	52
Marketing cost per unit sold	41
Fixed costs:
Manufacturing costs	1,092,000
Administrative costs	926,400
Marketing	1,393,700

1.	Prepare a 2013 income statement for ReadiClean Company using variable costing.
2.	Prepare a 2013 income statement for ReadiClean Company using absorption costing.
3.	Explain the differences in operating incomes obtained in requirement 1 and requirement 2.
4.	ReadiClean's management is considering implementing a bonus for the supervisors based on gross margin under absorption costing. What incentives will this create for the supervisors? What modifications could ReadiClean management make to improve such a plan? Explain briefly.